Solid Business Plan

Getting into business is costly, and that is the bare truth. There are many entrepreneurs in this sea of people around us, but only with ideas in their head. Nothing in terms of actual businesses!

But then, they do not know where to look. If you see carefully, there are a lot of investors out there who are looking out for just some entrepreneurs like these – entrepreneurs, who have good ideas for business, but do not have the capital to make the required start. If you can manage to catch their eye, you will get the capital you want for your business, and then there is no saying to what heights you can reach.

But it is important to impress these investors. You can very well guess that there will be hundreds of thousands of entrepreneurs wanting to forward their business plans to investors, so that they can get the break in life that they want. Do all of them get it? Hardly! The success ratio for getting a business investment is about 1 in 1000, or even less, as the number of prospective business investment applications is piling up. So where do you stand a chance? The truth is, you have to have a very powerful business plan – something that will impress the investors so greatly that they will consider your application and keep it on top of the heap in their 'IN' tray.

If you strategize carefully, you can really achieve that singular glory. Getting considered by investors for starting your business is no mean achievement, and is possible only with long hours of work. And a power-packed business plan. But before you even start out with making a business plan, you must know about the different kinds of business investors out there. They are of two main kinds – the angel investors and the venture capitalists.

Angel Investors – Angel investors are usually individual people, or sometimes groups of people, who have so much wealth in their coffers that they have nothing better to do with it than take risks by investing in business. In the very least, they get someone to manage their money. At the most, they get a share in a future corporate business. Though the name suggests so, there is nothing divine about angel investors. They will want a share in your company, and will want a part of the profits too. But, since angel investors usually operate individually, there can be many differences here in the way they operate.

Venture Capitalists – Venture capitalists are the more common type of investors for businesses, since angel investors are few and far between. Venture capitalists, or VCs as they are endearingly called by potential business investment seekers, operate in forms of organizations. They adopt businesses of a special kind, and rarely venture out of the genre. They will also want high stakes of ownership in the business they are investing, and will want minute reports of progress. It is much more difficult to catch a VC's eye than an angel investor's. But your business plan can do the trick. Here are some expert ideas on making a very effective business plan that could catch the eye of even the most discerning of investors.

Tips on Making a Successful Business Plan

Tip # 1 – Be perfectly sure of what your business is set out to do

You will be surprised to know the large number of people out there who want to enter business and even have a germ of an idea in their mind, but do not know what exactly they want to do with their business when asked. Such are the people who fail terribly when they submit their proposals to the investors. VCs are highly trained to weed out such vague proposals. When you are making your business plan, begin with the Executive Summary. The whole success of your business plan will depend on this, because it is here that the initial impressions will be formed. In this section, you should mention clearly what the intent and purpose of your business is. Make a very clear mention of why the market needs your business, and who your target market will be. If the investor gets convinced there is a market out there for your business, it is half the battle won.

Tip # 2 – Make clear projections

It is actually funny to see sometimes how some entrepreneurs put in their profit projections in their business plans. Reading something like 'If we have about 1000 customers in the first three months, we could surely be touching be 50 million mark within the year' makes for interesting reading; but it is surely not going to hold any water with the ever-so skeptical investors. When you are making a projection, be realistic. How did you arrive at the conclusion that you will get 1000 customers in the first three months? What are your marketing plans for achieving that? Will you have production enough to meet the sales if they come up? Write clearly about all these factors. And avoid using conditional sentences that begin with 'if' in your projections.

Tip # 3 – Be realistic about the risks

There is no business without risks and venture capitalists know this only too well. When proposals come to them, they are the ones to first assess the risks of the proposals. So, you will do very well if you mention the risks beforehand in your business plan. That will give a realistic flair to your report. Otherwise, it will appear like a fantasy novel, nothing else. That will not go any good when your VC is considering all the potentialities of your business plan. In fact, you must keep a separate section, perhaps in the Marketing Analysis topic to mention all the risks that are associated with your business. Make it also a point to clearly elucidate what resources your business has, or will have, to counter these risks.

Tip # 4 – Keep your language simple

You must remember that your business plan is not a blueprint you are going to hand out to your engineers. This is a business plan, and it will be read by an investor. The investor, though quite wealthy, might not be very proficient at language. You must know that a large number of business plans are rejected just because the investors fail to understand what the proposer was getting at. So, you need to be very clear-cut in your language, and not use any difficult phrases. It is better to use points and bulleted formats wherever you can.

In conclusion, being frank and honest with your business plan always works. Come to the point directly, and do not beat around the bush. Investors have very little time, and chances are that they will only skim through your business plan. You have just about a few seconds to impress them into making an investment for your business. Keep that in mind, and you will probably be setting a date for inaugurating your business venture!

The 5 Most Common Mistakes Made By Startups

Entrepreneurs are no strangers to mistakes. Mistakes will happen - with considerable frequency - and the value in making those mistakes is learning from them and avoiding them in the future. You can also study the mistakes of others that came before. Plenty of successful entrepreneurs are quite open about mistakes they’ve made, why they made them and what they learned. We don’t need to keep repeating each other’s mistakes over and over.

But, that’s quite often the case. When it comes to startup mistakes you’ll see many companies making the same ones over and over.

Here are 5 of the most common mistakes made by startups:

1. Staying in Stealth Mode Too Long. New startups seem quite fond of stealth mode (or its newer cousin “ninja mode”), when they’re hiding under the radar but still hyping just enough to try and pique interest. But stay in stealth mode too long and you run the risk of disappearing off the radar. Never mind the fact that you can’t sell your new product or service while in stealth mode and therefore can’t generate any revenue. There are plenty of reasons why startups launch too slowly; really you need to force yourself to launch and get past all the excuses.
2. Not Focusing on the User. Who are you building your new product for? Who is the precise target? Many startups can give a generic answer to that question, but very few of them are really honed in on the specific wants of their “perfect user.” This is a combination of too little research and too much enthusiasm for what they think is “the next killer idea.” This mistake is compounded if you’re building something that you wouldn’t use yourself. Building something you would use makes things easier - you’re the target user. Otherwise you need to take a much more pragmatic approach.

   As well, many startups take the approach of “being everything to everyone.” That strategy never works. You end up being nothing to anyone.

3. Trying To Do Everything. If a task isn’t core to your business try and outsource it. Entrepreneurs are extremely fond of saying they wear many hats (which is true!) but there’s a limit to what’s reasonable in the hat-wearing department. Lots of things can be outsourced, and although you’ll be paying someone else to do the work, you’ll be freeing up precious time of your own. That time will be infinitely more valuable than the money you spend.
4. Not Having Enough Infrastructure. Many startups don’t have the proper tools in place to start their business. Primarily, money and time. It’s getting cheaper and cheaper to start companies nowadays but it’s never free. Lots of people start companies without realizing how much money it’s actually going to take. When they clue in, and decide they don’t have the money to invest (or they’re not willing to part with it), they’re in trouble.

   Startups face similar challenges with time. People often start companies while working full-time jobs. It’s doable but damn hard. And as soon as the startup gets a bit rocky or other interests come into play, the startup company gets shelved or delayed. Paul Graham comments on this beautifully in The 18 Mistakes That Kill Startups. His theory is that people get into startups half-heartedly and that’s what kills them. I think that’s part of the answer. The other side of that coin is that people truly do care and believe in what they’re doing, but they don’t have the infrastructure and bandwidth in place to make it happen.

   Infrastructure issues are also related to a startup’s lack of connections and resources to find good vendors, good hires, mentors and people to rely on. A couple guys in a garage may have a great idea and tons of talent but when they need help securing a loan or handling a business-related task they may not have the network or foundation in place to support them.

5. Forgetting About Branding, Marketing and Sales. I know there are examples of companies succeeding with a “build it and they will come” approach. Some people argue if you build something people want they’ll find it and plunk down their hard-earned money. It happens. But more often than not you need to develop real, actionable and savvy branding, marketing and sales strategies. You might have a great product and the wrong message. Or a killer software application that no one knows about. It’s rare to have a startup where the founders (or one of them) has real experience in branding, marketing and sales. The result is either all the founders do it (and often poorly) or they all pass the buck.

   You can take a “build it and they will come” approach and hope for the world to pick up your scent and fall in love with you, or you can figure out how you’ll get the message out, what that message will be and how you’ll generate leads. Go with the latter.

The good news is that almost every mistake can be undone, and it’s rare that one mistake kills a startup completely. So feel free to make them - but skip those listed above…

Top 10 Steps for Success

Logically, every business owner or executive manager strives to succeed. For the benefit of the company, the employees, the product and last but not least, for themselves. Certainly, sometimes the order that i listed changes as little. I ran into a listing of the top 10 steps to succeed in business. Evaluate yourself, does your company do what's described below? Do you have room for improvement?

Here we go:

1. Develop a strategic plan. Many business owners measure their success by how hard they work and whether there is enough money to cover payroll, but in reality they operate best with a strategic plan and methodology for measuring and executing that plan.

2. Stay flexible to changes in the strategic plan. A strategic plan should be a work in progress that evolves in accordance with long term goals. Although flexibility is important, it does not mean that a business should be run without a strategic plan.

3. Transform yourself from company expert to master strategist. Focus on planning the future business success by creating a leadership team and delegating duties. This strategy might require an extensive role change, but will help to obtain more control for the future success of the company.

4. Focus on short-term growth. Key company goals should be monitored daily and weekly rather than monthly. By focusing on business growth in the short term there will be far less concern over the long term.

5. Develop reporting systems. Strategies cannot be implemented without reporting systems that track critical numbers. A daily review helps to measure and clarify where company efforts need to be enhanced as well as holds each employee accountable for performance.

6. Hold a daily management meeting. A daily meeting creates the intensity and focus needed for business owners to identify problems and issues before they get out of control. Meetings should focus on one key issue.

7. Control costs by budgeting percentages. Control costs by measuring a percentage rather than an absolute basis. Daily or weekly percentage increases and decreases should signal change and help to determine why inconsistencies might exist.

8. Offer incentives to key business drivers. All employees have the ability to drive or stall the business. Creative incentives that drive should contribute to both the profitability and mission of the company. Fair incentives should be tied to specific measurable items that each employee has control over.

9. Create a new management model. Creating a new management model allows for updating as well as preparing the business for positive change. Incorporate all levels of employees in both the thought and implementation process.

10. Play to win. These guidelines are easier and more enjoyable to adhere to when a company aims high and plays to win. A business that survives is the one that plans to innovate, allows for constant change and plays to win.

Found something that you're already doing? Anything that you're doing that leads to consequent success but is not mentioned here? Add it to the list, the more tips we can compile in this thread, the better it is for the community.