Tuesday, May 4th, 2010
Over the past several weeks, we have been discussing the components of a business plan in The Mom Entrepreneur Support Group. So far, we have discussed writing the Industry Analysis, Description of a Business and Competitive Analysis.
Members are undecided as to whether or not they actually need a business plan. They have mentioned reading articles or talking with experts who say a business plan is not necessary.
I strongly disagree. A business plan is imperative to the success of your business.
A “business plan” can take on different forms. When I started my first company, Bisson Barcelona, I wrote out a full business plan, which included sections on the industry, target market, competition, trends, marketing strategies and much more. This was a business plan that I took to the bank to secure funds needed to buy an office and equipment. I knew my business well, but needed an organized way to layout and present the information for investors as well as myself for planning future growth.
When I started my second company, The Mom Entrepreneur, I did not create the same kind of business plan. I was not seeking money from investors, and since I had already written a full business plan, I had a sense of the information I needed for planning the growth of the company.
I decided to use an idea notebook. This is a 6×9 inch notebook with pages that are filled with ideas, thoughts, plans, suggestions, etc. I refer to it often, make changes, delete ideas and add new ones.
No matter what type of business you own or how savvy of an entrepreneur you are, you must have a plan! Growing a business takes you to a destination. Would you get in a car and drive to a place you have never been before without a map or a GPS system or some other device to help you navigate?
Of course not. So why would you do it with your business?
“Even if you aren’t planning to borrow money or seek investors right away, there are good reasons to sit down and write a plan,” says Karen Klein, a business journalist who covers small-business issues for several national publications, including Businessweek. “Writing a business plan not only helps you determine whether your business idea is feasible, it also establishes a map for your company’s future. Without it, your business is likely to drift along without direction or parameters for measuring progress.”
Microsoft’s Small Business Center advises that if you’re starting a home-based business on a shoestring, some of these suggestions probably aren’t necessary, but you still should create a plan that outlines your goals, expected costs, marketing plan and exit strategy. If you haven’t written your plan yet, your business is still in the fantasy stages.
“A business plan is never quite finished because you’re always revising it, reviewing it, and building upon it. In fact, more important to your business’ future than having a written, 30-page, coil-bound plan to distribute is the business planning process that you undertake on a regular basis to hopefully keep your ship headed in the right direction without losing sight of your long-term destination,” explains Elizabeth Wasserman, a writer for Inc. Magazine.
Even a seasoned traveler needs to be reminded how to get to a destination. Perhaps landmarks have changed, or road construction has altered your direction.
If you are struggling in your business and feel like you have lost your sense of direction then take the time to research and write a business plan that outlines your goals and how you will achieve and measure them.
Here are some sites that can help get you started:
- SCORE Business Plan Templates- they have a variety of templates here to choose from depending on your type of business. Easy to understand and use.
- SBA Business Plan Template – this template is designed to help you build a business plan. Review and complete each section of the template. At the end of the program you will be able to generate and save a formatted business plan which can later be further modified or presented as a final product.
- Entrepreneur.com Business Plan – describes the different sections of a business plan and offers free sample business plans.
- Need help? Have questions? Join our discussion on The Mom Entrepreneur Support Group about how to write a business plan.
So mom entrepreneurs, what are your thoughts? Do you have a business plan? Do you recommend creating one for a business? I welcome your comments.
Tags: business planning, goal planning, How to write a business plan, starting a company, strategic plan
Wednesday, April 29th, 2009
Anyone with a child in girl or boy scouts knows that the first rule of scouting also applies to business: Always be prepared. As an entrepreneur, you’ve probably learned this lesson pretty quickly – effectively using the resources at your disposal can separate the successful business women from the rest of the pack. With loan default rates at record high levels and credit becoming more difficult to obtain, many entrepreneurs are turning to creative alternative financing solutions like merchant cash advances in order to make ends meet.
Business cash advance transactions are similar to loans in that they involve an application process and a payback period, where fees are charged in addition to repayment of the advance amount. You need to accept credit cards to qualify for an advance – repayment is transferred directly to the provider as a portion of your daily credit card sales. Some providers require additional qualifications, such as a verifiable financial history, existing property leases, or a minimum credit score to qualify. Merchant advances are much easier to obtain than traditional loans – some providers even boast that they approve over 90% of applicants.
Is a merchant cash advance a good idea? What should you look for in a provider? More importantly, what should you look out for? Here’s a brief primer on business cash advance transactions, gleaned from the experiences of real business owners:
FIND A GOOD PROVIDER
All providers are known by their reputation. Before signing a cash advance agreement, make sure to check out your prospective lender. Here are a few places to look:
- The Better Business Bureau: Check out the BBB website to find out if any complaints have been filed.
- The Federal Trade Commission: Since merchants can also file complaints against providers, the FTC website is another great place to check references.
- The North American Merchant Advance Association is a self-regulated organization of advance providers and their website provides information for consumers about industry standards and practices, and allows you to access complaints against providers.
In addition to checking these sites, you should also ask for references directly from a provider, and do a quick online search for more information. Be wary of providers that ask for an application fee, or those that guarantee automatic approvals. Providers with a “clean” record on all these counts are the best choices.
AVOID RISKY AGREEMENTS
Checking references is a great way to make sure your provider has a good reputation, but it won’t shield you from a potentially risky agreement. You’ll need to make certain that your individual service agreement is fair. Here are some “red flags” that a service agreement should be renegotiated:
- High fees and costs. Many providers charge monthly minimum amounts where you’ll pay a certain amount even if your credit card sales cannot “cover” the agreed upon amount. If your sales drop below a certain level, you may also be responsible for penalty fees and other charges.
- Merchant account compatibility. Most companies have agreements with several different merchant services account providers. If a company is asking (or requiring) that you switch in order to obtain an advance, be careful – the long term costs associated with switching might be higher than you can afford.
WHAT TO LOOK OUT FOR
While high fees and strict service agreement provisions sometimes cannot be avoided, there are a few things you should definitely avoid:
- Balloon repayment. Similar to a loan default provision, balloon repayment makes a borrower responsible for the entire advance balance at a certain date or if sales decline below a certain amount. Be extremely cautious if you are agreeing to such a term.
- Collateral. Some providers require that a business pledge equipment or property, or allow access to a business checking account to cover payments that aren’t transferred correctly or on time. This is like writing a blank check to the provider- try to avoid these kinds of arrangements if you can.
- Flexible rates. Sounds good in theory, but usually the rate only “flexes” in one direction: higher. Avoid any agreement that will be too difficult to repay.
A merchant cash advance can be a beneficial source of alternative financing for businesses that need cash for any reason. Make sure you choose a reputable provider and sign an agreement you are comfortable with.
About the author:
Betsy Brottlund is the Director of Marketing at Resource Nation, an online resource that provides expert advice on purchasing and outsourcing decisions from payroll services to phone systems for entrepreneurs and business owners. She frequently contributes to several sites that offer tools and advice for entrepreneurs, including Dell and BizEquity. Previously a communications consultant, Brottlund has worked with start-ups to Fortune 500 companies managing their marketing and communication programs.
Resource Nation provides tools to help start and grow your business and are used on other online business communities such as Entrepreneur.com, StartUpNation.com, and Ladies Who Launch.
Over the past several weeks, we have been discussing the components of a business plan in The Mom Entrepreneur Support Group. So far, we have discussed writing the Industry Analysis, Description of a Business and Competitive Analysis.
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