Category Archives: Business Plan

Get a Quick Start to Small Business Ownership: Generate Profits and Success Faster by Buying an Existing Business

There has been considerable attention paid to the challenges and pitfalls of starting a small business from scratch. It is certainly true that the first few years of a new business can be very challenging and, in most cases, unprofitable. While being able to create a business’ culture and operating systems from the beginning can be a big plus for an entrepreneur, there is a lot to be said for letting someone else handle the start-up headaches.

Buying an Existing Business can be a Smart Alternative

Any entrepreneur wishing to start a small business should consider purchasing an existing one before taking the plunge into the start-up fray. An existing business usually has a client / customer base in place and operating systems that, if not effective, can serve as a foundation for improvement. There are also vendor relationships established and a certain amount of good will in the community that are important considerations.

The key to purchasing an existing small business is to spend the time needed to ensure that it has a reasonably solid financial and operating structure in place and has a decent reputation in the community. Here are four things to consider before purchasing an existing small business.

Purchase the Business Assets, Not the Business

It is always best to purchase a business’ assets and create a new corporation or entity as opposed to buying the business itself. This will create a better tax position because the taxes will be based on the selling amount, not what the seller spent on the business’ resources. Also, purchasing just the assets protects the buyer from responsibility for any liabilities or law suits carried by the seller. With this in mind, it is also important to obtain an indemnity from the seller which further protects the buyer from actions taken by the seller prior to the sale.

Perform Due Diligence to Ensure that the Business is on Reasonably Sound Footing

It is imperative to review the seller’s accounting, operating, and marketing information to determine the business’ viability and potential for expansion. Reviewing accounting spreadsheets such as balance sheets and profit and loss statements can by very useful, and take a close look at staffing, office expenses, and marketing materials to estimate overhead costs. The seller will require the signing of a “nondisclosure” statement to ensure confidentiality of the information, but any buyer should be able to access financial and operational information. If it is refused, beware!

Determine How the Accounts Receivables, Prepaid Expenses, and Office Leasing Will be Handled

Discuss how the accounts receivables will be handled. The seller may want to keep them or they can be included in the sale of the business at a reduced rate to account for any defaults that may occur. It is also important to discuss any prepaid agreements that the seller has made such as insurance or advertising. The arrangements for handling these agreements need to be addressed upfront. Also, find out about the lease arrangements to determine if it is reasonable to assume responsibility for the current lease or negotiate a new one. It may also be more efficient to move the business to a different location.

Develop Letter of Intent

This document can be very useful in spelling out the primary terms of the sale such as purchase price, identification of specific assets being included, and the transition process from seller to buyer. It will also include non-compete language which protects the buyer from the seller opening up a new business and becoming a competitor. The letter of intent helps to create good faith between the seller and buyer and will make the development of the actual contract easier.

Determine if Employees Will Remain with the Business after the Sale

Losing important employees at the point of sale would be very compromising to the buyer. Therefore, negotiate with the seller to meet with employees to determine their interest in remaining with the business, at least for a period of time. This will reduce the likelihood of being caught off-guard by a mass exodus of employees.

Be Methodical in Purchasing an Existing Business

Buying an existing business can be the right thing to do if the priority is to become operable and profitable quickly. However, it will also require larger financial resources upfront or, at least, the ability to borrow money for the purchase. Every entrepreneur’s situation is different, so it is well worth the time to determine if purchasing an existing business is practical or if starting from scratch is the best avenue to take.

Maximize Your Selling Effectiveness: Professional Selling – Make the Most of Your Time and Effort

The three great time wasters: administrative work, traveling, and waiting can eat into productive time. Although these activities are unavoidable, you can employ strategies to maximize your effectiveness and concentrate your time where it will do the most good.

Maintain Excellent Records

Get organized. Lack of organization is a big time waster. A jumble of papers in your briefcase isn’t a system. Complete records and a regular routine of logging important information will save time by allowing you to input information once but access it many times and in many ways. One concise entry into a contact management program can be used to organize selling strategies, schedule visits, and compile reports.

Learn How to Write Well

Salespeople are often called upon to create their own e-mails and write their own letters. The more comfortable you are with the written word, the more easily you will be able to perform these tasks quickly and well.

The days are long gone when a department secretary would take a scribbled idea and make it into a professional presentation. Struggling for 15 minutes to write a difficult paragraph is a poor use of your time, and the results of your effort will probably be disappointing. Poor writing appears unprofessional and reflects on your entire organization. Seminars and night classes are available that target business writing and offer accelerated methods for learning grammar and usage. You may even be able to arrange for a trainer to visit your business to conduct onsite training.

With better writing skills, some of the tasks that you dread will become less of a chore and you will be able to complete them more quickly and successfully.

Always Schedule Sales Calls Ahead of Time

Scheduling ahead cuts down on waiting time and allows you to group visits to a number of locations into one trip to save on energy costs. Preplanning visits can also give you an opportunity to strategize and prepare materials in advance.

Cut Back on Unnecessary On-Site Visits

Reduce premises visits if you can. Don’t plan a visit to conduct business that you can complete over the phone or via e-mail unless you have a good reason for doing so. If a sales call is necessary, plan your route with trip software in order to find the fastest and most economical way to travel.

Be Prepared and Take Time Where You Find It

When traveling, keep tools on hand that will help you keep up on administrative tasks. Waiting to get back to the office to catch-up can be hard to do without dropping the ball somewhere.

The more current you are with your repetitive tasks, the more latitude you will have in planning the most efficient use of your time. Airplanes, waiting rooms, and hotel rooms are all places that can burn up idle time. With the appropriate tools, many chores can be accomplished during time that would otherwise be wasted.

Put Your Time Where It’s Needed

Existing customers generate the greatest sales volume. Review your customer list to determine the best timeline for dealing with them. If you are in different time zones, consider modifying your schedule to adjust for the time change. Taking the extra initiative to make yourself available on their schedule will make you stand out and give you extra “effective” hours.

 

An effective salesman plans his time. The key to producing maximum return on time invested is to plan with the goal of incorporating efficiency into the mix. Careful planning can reduce the time spent on non-selling tasks and focus selling activities where they will be the most productive: on making the sale.

6 Reasons To Update Your Business Plan: Your Plan For Your Company Is Your Roadmap So Keep It Updated

Your business plan is your roadmap to success. But your path is constantly changing and to keep your goals clear and fresh you need to update your plan regularly.

A business plan is not something you write and then toss in a drawer. It’s an ongoing blueprint of what you want to accomplish and how you plan to get there. But your goals for your business and the climate you operate in will change. So your plan will need to be adjusted accordingly. Here are just a few of the reasons that you may have for keeping your plan up to date.

  1. Changing Markets

The most obvious reason for updating your plan is that the market is changing. Possibly some new opportunities for you to sell your products have materialized. Maybe you’ve reached your original goals faster than you thought would be possible and new goals need to be established. Or you’ve found that your original goals did not reflect current market conditions accurately enough. Either way you need to make some changes.

  1. New Products

You’ve got a new product that will have a dramatic effect on your business. Your current plan might not take the new product into account. And the new product might have an effect on the results your business is going to be able to achieve. Again it’s time to update your plan.

  1. You Need More Money

You’re about to approach your bank or investors about borrowing money. Because they have a financial decision to make they are going to want to see an updated plan. An outdated plan on the part of the borrower is not going to help convince the people that control the purse strings to loan you money.

  1. New Management

You’ve recently overhauled your management team. Because you now have new people in charge your plan needs to reflect that. And you need to make sure that everyone on your team is on the same page. Your business plan wasn’t written just for you it was written for your company and all of its key people.

  1. A New Fiscal Year

The new fiscal year is about to role around. This means it is time to set some new goals for your business. Keeping your financial objectives up to date is important to your business.

  1. Hitting New Highs

And of course one of the best reasons of all is that you may have passed a financial benchmark such as a million dollars in sales for the year. Or there has been some other significant event that has recently happened to your company. A major event is always cause for getting your plan up to date.

Update Your Plan Regularly

Remember your plan needs to be updated regularly if it is to be of any use to you. These are just some of the more significant events that may happen to your business which should give you a reason for updating it. Of course it really is a good idea to actually update it on a quarterly basis regardless of whether one of these events has occurred or not. Remember your business plan won’t be able to help you if it doesn’t reflect your current situation.

Citing Sources in a Business Plan: Forecast Market Trends Using Facts, not Fantasy

In a tight credit market, lenders and investors want to see verifiable information in a business plan’s analysis. When seeking financing or investors, show the facts!

Businesses seeking financing or investors must be supported by a business plan that provides verifiable information. Especially during an economic downturn, lenders and venture capitalists will go over financial projections with a fine-toothed comb. The plans that back up claims with research provide a competitive edge to those businesses in an increasingly tight credit market.

Finding Sources to Cite

The best practice is to do research before writing a business or marketing plan. Not only is it more ethical and professional, it also makes it much easier to back up the data if the writer knows what information is available beforehand. Some places to check for facts include:

  • Government reports, including demographical data from the US Census Bureau
  • Industry and trade publications
  • The business section of any college or academic library

It is perfectly acceptable to conduct market research specific to the business, as well. A study conducted or commissioned by the subject business should clearly lay out the methods used for gathering data, and the full report should be included as an appendix to the business plan.

Choosing a Citation Method

Various styles of citing sources existing in academia, but there is no generally accepted method for business writing. When deciding how to cite sources, the following tips should be kept in mind:

  • Be appropriate: what method will be easiest for the readers of the business plan?
  • Be consistent: once a method is selected, use the same one throughout the document to avoid confusion.
  • Be convenient: keep footnotes on the same page as the main text whenever possible – avoiding the additional page flipping may increase the likelihood that the plan is read all the way through.

There are three main academic forms of citation, as well as more specialized styles.

  • The Modern Language Association (MLA) format is often used in the humanities.
  • The American Psychological Association (APA) style is common in the social sciences, and is appropriate for plans that cite more technical documents.
  • The University of Chicago Press maintains the Chicago Manual of Style.
  • The Council of Science Editors (CSE) uses a format that is useful for engineering and research firms.
  • Plans that rely upon trends in litigation or intellectual property rights may be well served by using one of the legal citation styles used in court briefs.

In the business world, the specific method of citation is a matter of preference, either the writer’s or the reader’s. The purpose of citing sources in a business plan is to make it clear that the plan is thoroughly researched, and the method selected should leave the reader with no doubt.

The Necessity of a Good Business Plan: Why Your Business Needs to Have a Proper Plan

It’s a given that a business needs a business plan. Often, though, business owners, once they’ve written their plan, will neglect it. But your plan is your guide.

Getting a business off the ground is not an easy thing to do. It requires a lot of hard work and sacrifice. But what many people fail to realize is that what a business needs most of all is a good plan. People start businesses based on ideas and emotions. They believe they have a great idea or they feel they can do something better. And they may be right. But before they go and throw their time, money and other resources into a business they need to make sure they have a plan. Without it all you have is a recipe for disaster.

Tools to Construct Your Plan

Before you even dream of getting the doors of your business open you need to construct your plan. You need to take your vision and articulate it for people to read. To help you do this you can purchase a software program that will help you to put together a nicely layed out plan. There are also plenty of free examples all over the internet for you to take a look at in case you’re not sure what one looks like. You might even find an example of a plan in your industry.

What Your Business Plan Is Used for

Your business plan is a plan for the present and for the future. It’s about both where your company currently is and where you want it to go. It will be used to convince others such as banks and potential investors about either the strength of your idea or of your company. It will show them how you plan to thrive and grow. Your business plan reflects how much you know about your industry, your market, and your competition. Your business plan can be used to sell your ideas to others.

Business Plan Ingredients

In your business plan you’ll state what your short and long term goals are for the business. You’ll detail the steps you are taking and intend to take to get there. You’ll explain the resources you have to use and what more you’ll need for your plan to be a success. And you’ll be prepared to adjust your plan as the future unfolds. You’ll adjust it and tweak it constantly because your goals will change and so to must your plan. You have to be flexible with your plan.

Your Vision for Your Business

A business plan is about a vision and its goal is to help you explain that vision to others. It is meant to be an ever present reminder to you of what you are trying to achieve. It does you no good if it is shoved in a drawer and left to collect dust. You need to refer to it often so that you know whether or not you are accomplishing the goals that you established in your plan. It needs to be updated regularly so that it can reflect the changes that have taken place since the plan was created. It needs to be updated so that it stays relevant to the present and the future. That is why you need a good business plan.