Developing an Effective Business Plan - Blog #10

Factors that Make a Good Business Plan

What makes a good business plan?

The value of a business plan is measured in money. The actual calculation is somewhat hypothetical. With that in mind, here are some of the qualities of a good business plan, in order of importance:

1. It fits the business need- We simply can’t look at business plans as common. You have to start with whether or not the plan achieved its business purpose.

2. It is realistic. It can be implemented. The second measure of good or bad in a business plan is realism.

3. It is specific. You can track results against plan.

4. It clearly defines responsibilities for implementation

5. It clearly identifies assumptions

6.  It is communicated to the people who have to run it - At this point we leave the discussion of the plan itself as if it were a stand-alone entity, and get into how the plan is managed. The first five points here are about the plan. You can deal with them as the plan develops. This and the following two are about the management of the plan.

7.  It gets people committed -  The plan has to have the specifics in point 3 and responsibilities as in point 4, but the management has to take them to the team and get the team committed.

8. It is kept alive by follow up and planning process - One can have all seven of the above points, and if one drop the ball — the plan in the drawer syndrome — then the plan still is not a good plan. It has to bring the planning process with it, meaning regular review and course correction.

 No business plan is good if it is static and inflexible.


http://timberry.bplans.com/2009/02/some-key-questions-on-business-plans.html

Financial Preparation for Entrepreneurial Ventures - Blog #9

Financially Prepare for Entrepreneurship

Pay down debt

•Call creditors and negotiate a lower interest rate

•Don’t close those $0 balance account

•Use windfalls properly

Build a cash cushion

Purchase some key benefits while you are still employed

The benefits available through your employer are almost always better and less expensive than benefits available to individuals or small businesses, but there are some ways you can leverage those benefits to your advantage.  Before you strike out on your own, explore these possibilities:

•Check if any of your current benefits are portable
•Purchase disability insurance: 
•Make contributions to a Health Savings Account (HSA): 

 PREPARING FINANCIAL STATEMENTS

One of the most powerful tools the entrepreneur can use in planning financial operations is a budget. 4 The operating budget is a statement of estimated income and expenses over a specified period of time. Another common type of budget is the cash budget, which is a statement of estimated cash receipts and expenditures over a specified period of time. It is typical for a firm to prepare both types of budgets by first computing an operating budget and then constructing a cash budget based on the operating budget. A third common type of budget is the capital budget, which is used to plan expenditures on assets whose returns are expected to last beyond one year. This section examines all three of these budgets: op­erating, cash flow, and capital. Then the preparation of pro forma financial statements from these budgets is discussed.

 

http://www.startupnation.com/business-articles/1274/1/financially-prepare-entrepreneurship.asp

Marketing Challenges for Entrepreneurial Ventures - Blog #8

Challenges and Entrepreneurial Marketing to Solve those Problems
 
-Innovativeness
-Risk-taking
-Proactive
-Opportunity driven
-Customer focus
-Resource leveraging

Entrepreneurial Marketing
     *Identifying and acting on an opportunity
     *Defining, offering and delivering “compelling” value to customers
     *Managing changes and sustaining value

Market Research
       Definition: The process of gathering, analyzing and interpreting information about a market,   about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face.

Market research provides relevant data to help solve marketing challenges that a business will most likely face--an integral part of the business planning process.

            Market research involves two types of data:

•Primary information. This is research you compile yourself or hire someone to gather for you.

•Secondary information. This type of research is already compiled and organized for you. Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within your industry. Most of the research you gather will most likely be secondary.

 

http://www.entrepreneur.com/encyclopedia/term/82436.html
http://youtu.be/PPAMCwBlyiM

Assessment of Entrepreneurial Opportunities. Feasibility Plan Outline - Blog#7

Identifying and assessing opportunity are two key steps that a company must do to grow and retain their competitive advantages. Sometimes, an entrepreneur stumbles upon an opportunity. While one record may play a role in identifying an opportunity, more often it is a systematic analysis of the business environment that is required.

Entrepreneurs look for changes in the political, economic, social, and technological environment that disturb the balance in the market place and, therefore, create new business opportunities. Similarly, customers' dissatisfaction with the capacity of existing products and services to meet their needs indicates an opportunity.

Two problems when exploring and assessing an opportunity.
  * Selective Analysis. When we tend to observe winners and not the rest, we are not learning for others mistakes.
*Chaos. The affect of randomness and the effect it has on businesses.

 The success of a business depends on  the skill of its key employees, as well as, competitors actions, customer interactions and  the hard work.

Feasiblity Plan Outline

The Business Feasibility study finding will be assessed by potential investors and stakeholders regarding their reliability and strength of argument. The study places the discovery of  the dimensions of Business Viability Model assessment intoa formal business report. The report aligns the finding with practical processes of an enterprise which and viewers can easitly understand.

Because putting together a Business Plan is a significant investment oftime and money, he entrepreneur should make suree that thete are non major roadblocks on their course to business success.

The following represent a structural outline for a Business Feasibility Study:

Executive Summary This is the most concise form of the business plan, covering all of the key points. Outside parties typically review the Executive Summary first to determine if your company is a potential candidate before deciding to read further.

Company Description This first full section of the business plan covers the company’s mission, history, current status, strategies, and plans for the future.

Management and Organization Many potential investors consider the management team  to be the most important predictor of a successful business.

The Market and Competitors This section must define the company’s market, the industry, current and potential buyers, and competitors.

The Product or Service In this section, the features, components, and quality of the product(s) or service(s) are described in detail.

Marketing and Sales The business plan must describe the company’s selling methods (such as direct sales or mail order).

Effective marketing, often through advertising and public relations, must also be described.

Financial Information The most important elements of this section are the financial forecasts — the balance sheets and the statements of cash flow and income.

http://bestentrepreneur.murdoch.edu.au/Business_Feasibility_Study_Outline.pdf
http://www.youtube.com/watch?v=PPAMCwBlyiM

Legal Challenges for Entrepreneurial Ventures. Execution of Tasks & Project Planning Blog #6

       Entrepreneurs face many challenges when starting a new venture. Legal issues often times do not get the attention it deserve, due to a lack of time and knowledge. Entrepreneurs make business decision each day, many of which have significant legal implications.

Top Ten Legal Mistakes Made by Entrepreneurs

#1: Thinking any legal problems can be solved later. Excellent legal talent can be retained for relatively little money up front at the early stages. It will cost much less to get it right at the beginning than to try to sort it all out later and correct it.

#2: Promising more in the business plan than can be delivered and failing to comply with state and federal securities laws. If someone promises to do something and knows that they can't perform that promise, that's considered fraud. In a business plan, one must make an honest appraisal of what's doable and set forth their assumptions, so the person putting up money can judge whether they are realistic.

#3: Starting a business while employed by a potential competitor, or hiring employees without first checking their agreements with the current employer and their knowledge of trade secrets. The law is clear that if someone is currently working for a company, particularly if her or she is a key employee, they cannot operate a competing business.

#4: Disclosing inventions without a nondisclosure agreement or before the patent application is filed. Is it wise to get potential venture capitalists to sign a nondisclosure agreement? In the best of all worlds, yes, but most won't.

 #5: Waiting to consider international intellectual property protection. In the United States, if an invention is sold or made public, there's a year's grace period to file a patent application. Everywhere else, if the invention is sold or publicized prior to filing the patent application, the invention is unpatentable in that country.

# 6: Negotiating venture capital financing based solely on the valuation. Valuation is not the only thing one should consider when selecting a venture capitalist or when negotiating the deal.

#7: Failing to make a timely Section 83 (b) election. An 83 (b) election allows the tax computation to be made based on the value at the times the shares are issued, which are often pennies per share.

#8: Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists. Lawyers who have no experience working with entrepreneurs and venture capitalists will most likely focus on the wrong things while failing to recognize some of the more subtle potential traps.

 # 9: Issuing founder shares without vesting. Simply put, vesting protects the members of the founding team who take the venture forward.

# 10: Failing to incorporate early enough. One problem that arises here is the so-called "forgotten founder": a partner involved in starting the venture subsequently drops out. When the venture gets financing or is ready to go public, this partner returns, perhaps with an inflated view of what his or her contribution was, demanding equity.

          Out of the 10 legal mistakes, one stands out the most for me: #4: Disclosing inventions without a nondisclosure agreement or before the patent application is filed. Along with getting the nondisclosure agreement sign and the patent application file. Don’t talk to anyone you don’t trust, make sure they have a legal obligation to keep your idea a secret, and if they do not need to know, do not tell them. The other 9 mistakes do not matter, if your idea is stolen.

http://youtube.com/watch?v=t-ez-uQOTZ8

http://hbswk.hbs.edu/item/3348.html

Pathway to Entrepreneurial Ventures. Execution of Tasks & Project Planning Blog #5

 The pathway to entrepreneurial ventures comes to us in various method. One can take the pathway to entrepreneurial by:

1. Creating a new venture - The most effective way is to create a unique product or service that is not being offered today, but would be in great demand if it were.

2. Acquiring an existing venture - An entrepreneur may seek to purchase a business venture rather than start a business.

3. Obtaining a franchise - A franchise is a form of business that incorporates some of the independence of an entrepreneur with the large umbrella of a corporation.

How does one decide which pathway to take?

The process has four distinct phases: (1) identification and evaluation of the opportunity, (2) development of the business plan, (3) determination of the required resources, and (4) management of the resulting enterprise.

Surprisingly, a large percentage of entrepreneurs find the pathway to their own company, by first working for large corporations. Once the employee become senior in their careers, they start to look for positions with smaller and smaller companies, like equity and high growth companies, until they decide to use their expertise to fuel their own entrepreneurial venture.

Innovation: The Creative Pursuit of Ideas.| Execution of Tasks & Project Planning Blog #4

What is innovation? The process by which an idea or invention is translated in a good or service for which people will pay, or something that result from this process. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need.

Trends signal shifts and observing trends closely will grant an entrepreneur the ability to recognize a potential opportunity.

-          Societal Trends: Lowering education standards/less skilled thought leaders, managing our waste/reuse products, energy and water shortages, on-demand and media consumption.

-          Technology Trends: a more semantic web, significant consolidation & M&A Activity, a continued drop in traditional index searches, internet advances.

-          Government Treads: increase regulations, petroleum prices, terrorism.

-          Economic Trends: higher disposable income, dual wage-earner families, performance pressures.

How do leaders encounter new and creative ideas? Leaders have the responsibility not only be creative, but to empower others in the department / organization to be creative. As leaders, we may produce one or two powerful ideas, by soliciting the help of other, leaders will attain many ideas.

We have never been in a better position to pursuit our entrepreneur ideas, as there are more resources available than ever before.

www.youtube.com/watch?v=RvRmTP5shg
Entrepreneurship: Theory|Process|Practure by Donald F. Kuratko
http://www.regent.edu/acad/global/publications/lao/issue_9/pdf/pursuit.pdf