8
Jul

What Is Greenwashing?

What Is Greenwashing?
By Carlyann Edwards,

You’ve probably heard of whitewashing, defined as the glossing over or covering up of scandalous information through a biased presentation of facts. But greenwashing isn’t as well known. It occurs when a company or organization spends more time and money claiming to be “green” through advertising and marketing than actually implementing business practices that minimize environmental impact. Environmentalist Jay Westerveld coined the term in 1986 in a critical essay inspired by the irony of the “save the towel” movement in hotels.
Origins of greenwashing

The idea of greenwashing emerged in a period when most consumers received their news from television, radio and print media, and didn’t have the luxury of fact-checking in the way we do today. In the mid-1980s, oil company Chevron commissioned a series of expensive television and print ads to broadcast its environmental dedication. But while the infamous The People Do campaign ran, Chevron was violating the Clean Air Act, Clean Water Act and spilling oil into wildlife refuges.

Chevron was far from the only corporation making outrageous claims. In 1991, chemical company DuPont announced its double-hulled oil tankers with ads featuring marine animals prancing in chorus to Beethoven’s “Ode to Joy”. It turned out the company was the largest corporate polluter in the U.S. that year.

Greenwashing has changed over the last 20 years, but it’s certainly still around. As the world increasingly embraces the pursuit of greener practices, corporate actors face an influx of litigation surrounding misleading environmental claims.

In February of 2017, Walmart paid $1 million to settle greenwashing claims that alleged the nation’s largest retailer sold plastics that were misleadingly touted as environmentally responsible. California state law bans the sale of plastics labeled as “compostable” or “biodegradable,” as environmental officials have determined such claims are misleading without disclaimers about how quickly the product will biodegrade in landfill.

Even the water industry tries to overrepresent its greenness. How many plastic bottles have you seen with colorful images of rugged mountains, pristine lakes and flourishing wildlife printed on their labels? Arrowhead promotes its Eco-Slim cap and Eco-Shape bottle while claiming, “Mother Nature is our muse.”

“The core theme has stayed the same,” said Philip Beere, founder of sustainability content marketing company g Communications. “The No. 1 violation is embellishing the benefit of the product or service.”

Beere said he believes greenwashing is rarely caused by malicious plots to deceive, but is more frequently the result of overenthusiasm, and it’s easy to see why marketers are enthusiastic. Sixty-six percent of consumers would spend more on a product if it comes from a sustainable brand, according to Nielsen’s Global Corporate Sustainability Report, a figure that jumps to 72 percent among millennials.
Brainwash or Greenwash?

With the belief that consumer demand for sustainability is the frontier of our transition to a greener, fairer and smarter global economy, Futerra’s 2015 Selling Sustainability Report offers 10 basic rules for avoiding greenwashing.

Fluffy language: Words or terms with no clear meaning (e.g., “eco-friendly”)
Green products vs. dirty company: Efficient light bulbs made in a factory that pollutes rivers
Suggestive pictures: Images that indicate an (unjustified) green impression (e.g., flowers blooming from exhaust pipes)
Irrelevant claims: Emphasizing one tiny green attribute when everything else is un-green
Best in class: Declaring you are slightly greener than the rest, even if the rest are pretty terrible
Just not credible: “Eco-friendly” cigarettes, anyone? “Greening” a dangerous product doesn’t make it safe.
Gobbledygook: Jargon and information that only a scientist could check or understand
Imaginary friends: A label that looks like a third-party endorsement … except it’s made up
No proof: It could be right, but where’s the evidence?
Outright lying: Totally fabricated claims or data

There are plenty of wonderful companies telling their environmental stories to the world, and even some who aren’t that should be. The incidence of “pure greenwash,” purposeful untruths or impacts of products, is not that prominent. However, there’s a lot out there that gets close. Beere describes the buzzwords commonly used to greenwash as a “slippery slope” and advises any company ready to go down it to invest in educating their marketers.

“Eco-friendly,” “organic,” “natural” and “green” are just some examples of the widely used labels that can be confusing and misleading to consumers. If you’re ready to slap some grass on your logo, be transparent with customers about your company’s practices and have information readily available to back it up.

One example of transparency is activist outdoor clothing retailer Patagonia. Unlike most companies, Patagonia doesn’t sugarcoat its use of chemicals or the fact that it leaves a footprint. The company’s sustainability mission is described as a “struggle to become a responsible company.”

“We can’t pose Patagonia as the model of a responsible company,” the website reads. “We don’t do everything a responsible company can do, nor does anyone else we know. But we can tell you how we came to realize our environmental and social responsibilities, and then began to act on them.”

Do your best to tell your sustainability story and avoid greenwashing. After all, we all know how costly a trip to the cleaners can be.

19
Sep

Reading Just The News That I Want

I first got news of the school shooting in Parkland, Fla., via an alert on my watch. Even though I had turned off news notifications months ago, the biggest news still somehow finds a way to slip through.

But for much of the next 24 hours after that alert, I heard almost nothing about the shooting.

There was a lot I was glad to miss. For instance, I didn’t see the false claims — possibly amplified by propaganda bots — that the killer was a leftist, an anarchist, a member of ISIS and perhaps just one of multiple shooters. I missed the Fox News report tying him to Syrian resistance groups even before his name had been released. I also didn’t see the claim circulated by many news outlets (including The New York Times) as well as by Senator Bernie Sanders and other liberals on Twitter that the massacre had been the 18th school shooting of the year, which wasn’t true.

Instead, the day after the shooting, a friendly person I’ve never met dropped off three newspapers at my front door. That morning, I spent maybe 40 minutes poring over the horror of the shooting and a million other things the newspapers had to tell me.

Not only had I spent less time with the story than if I had followed along as it unfolded online, I was better informed, too. Because I had avoided the innocent mistakes — and the more malicious misdirection — that had pervaded the first hours after the shooting, my first experience of the news was an accurate account of the actual events of the day.

This has been my life for nearly two months. In January, after the breaking-newsiest year in recent memory, I decided to travel back in time. I turned off my digital news notifications, unplugged from Twitter and other social networks, and subscribed to home delivery of three print newspapers — The Times, The Wall Street Journal and my local paper, The San Francisco Chronicle — plus a weekly newsmagazine, The Economist.

I have spent most days since then getting the news mainly from print, though my self-imposed asceticism allowed for podcasts, email newsletters and long-form nonfiction (books and magazine articles). Basically, I was trying to slow-jam the news — I still wanted to be informed, but was looking to formats that prized depth and accuracy over speed.

It has been life changing. Turning off the buzzing breaking-news machine I carry in my pocket was like unshackling myself from a monster who had me on speed dial, always ready to break into my day with half-baked bulletins.

Now I am not just less anxious and less addicted to the news, I am more widely informed (though there are some blind spots). And I’m embarrassed about how much free time I have — in two months, I managed to read half a dozen books, took up pottery and (I think) became a more attentive husband and father.

Most of all, I realized my personal role as a consumer of news in our broken digital news environment.

We have spent much of the past few years discovering that the digitization of news is ruining how we collectively process information. Technology allows us to burrow into echo chambers, exacerbating misinformation and polarization and softening up society for propaganda. With artificial intelligence making audio and video as easy to fake as text, we’re entering a hall-of-mirrors dystopia, what some are calling an “information apocalypse.” And we’re all looking to the government and to Facebook for a fix.

But don’t you and I also have a part to play? Getting news only from print newspapers may be extreme and probably not for everyone. But the experiment taught me several lessons about the pitfalls of digital news and how to avoid them.

I distilled those lessons into three short instructions, the way the writer Michael Pollan once boiled down nutrition advice: Get news. Not too quickly. Avoid social.

I know what you’re thinking: Listening to a Times writer extol the virtues of print is like taking breakfast suggestions from Count Chocula. You may also wonder if I am preaching to the choir; doesn’t everyone reading this story already appreciate print?

Probably not. The Times has about 3.6 million paying subscribers, but about three-quarters of them pay for just the digital version. During the 2016 election, fewer than 3 percent of Americans cited print as their most important source of campaign news; for people under 30, print was their least important source.

I’m nearly 40, but I’m no different. Though I have closely followed the news since I was a kid, I always liked my news on a screen, available at the touch of a button. Even with this experiment, I found much to hate about print. The pages are too big, the type too small, the ink too messy, and compared with a smartphone, a newspaper is more of a hassle to consult on the go.

Print also presents a narrower mix of ideas than you find online. You can’t get BuzzFeed or Complex or Slate in print. In California, you can’t even get The Washington Post in print. And print is expensive. Outside New York, after introductory discounts, seven-day home delivery of The Times will set you back $81 a month. In a year, that’s about the price of Apple’s best iPhone.

What do you get for all that dough? News. That sounds obvious until you try it — and you realize how much of what you get online isn’t quite news, and more like a never-ending stream of commentary, one that does more to distort your understanding of the world than illuminate it.
Image

I noticed this first with the deal Democrats made to end the government shutdown late in January. On the Jan. 23 front pages, the deal was presented straight: “Shutdown Ends, Setting Up Clash Over ‘Dreamers,’” ran The Times’s headline on the news story, which appeared alongside an analysis piece that presented the political calculations surrounding the deal.

Many of the opinions in that analysis could be found on Twitter and Facebook. What was different was the emphasis. Online, commentary preceded facts. If you were following the shutdown on social networks, you most likely would have seen lots of politicians and pundits taking stock of the deal before seeing details of the actual news.

This is common online. On social networks, every news story comes to you predigested. People don’t just post stories — they post their takes on stories, often quoting key parts of a story to underscore how it proves them right, so readers are never required to delve into the story to come up with their own view.

There’s nothing wrong with getting lots of shades of opinion. And reading just the paper can be a lonely experience; there were many times I felt in the dark about what the online hordes thought about the news.

Still, the prominence of commentary over news online and on cable news feels backward, and dangerously so. It is exactly our fealty to the crowd — to what other people are saying about the news, rather than the news itself — that makes us susceptible to misinformation.
Not too quickly.

It’s been clear that breaking news has been broken since at least 2013, when a wild week of conspiracy theories followed the Boston Marathon bombing. As I argued then, technology had caused the break.

Real life is slow; it takes professionals time to figure out what happened, and how it fits into context. Technology is fast. Smartphones and social networks are giving us facts about the news much faster than we can make sense of them, letting speculation and misinformation fill the gap.

It has only gotten worse. As news organizations evolved to a digital landscape dominated by apps and social platforms, they felt more pressure to push news out faster. Now, after something breaks, we’re all buzzed with the alert, often before most of the facts are in. So you’re driven online not just to find out what happened, but really to figure it out.

This was the surprise blessing of the newspaper. I was getting news a day old, but in the delay between when the news happened and when it showed up on my front door, hundreds of experienced professionals had done the hard work for me.

Now I was left with the simple, disconnected and ritualistic experience of reading the news, mostly free from the cognitive load of wondering whether the thing I was reading was possibly a blatant lie.

Another surprise was a sensation of time slowing down. One weird aspect of the past few years is how a “tornado of news-making has scrambled Americans’ grasp of time and memory,” as my colleague Matt Flegenheimer put it last year. By providing a daily digest of the news, the newspaper alleviates this sense. Sure, there’s still a lot of news — but when you read it once a day, the world feels contained and comprehensible rather than a blur of headlines lost on a phone’s lock screen.

You don’t need to read a print newspaper to get this; you can create your own news ritual by looking at a news app once a day, or reading morning newsletters like those from Axios, or listening to a daily news podcast. What’s important is choosing a medium that highlights deep stories over quickly breaking ones.

And, more important, you can turn off news notifications. They distract and feed into a constant sense of fragmentary paranoia about the world. They are also unnecessary. If something really big happens, you will find out.
Avoid social.

This is the most important rule of all. After reading newspapers for a few weeks, I began to see it wasn’t newspapers that were so great, but social media that was so bad.

Just about every problem we battle in understanding the news today — and every one we will battle tomorrow — is exacerbated by plugging into the social-media herd. The built-in incentives on Twitter and Facebook reward speed over depth, hot takes over facts and seasoned propagandists over well-meaning analyzers of news.

You don’t have to read a print newspaper to get a better relationship with the news. But, for goodness’ sake, please stop getting your news mainly from Twitter and Facebook. In the long run, you and everyone else will be better off.
Comments

The Times needs your voice. We welcome your on-topic commentary, criticism and expertise.

Email: farhad.manjoo@nytimes.com; Twitter: @fmanjoo.

Farhad Manjoo will be taking a leave of absence from the column to write a book. He will return in June.
A version of this article appears in print on March 8, 2018, on Page B1 of the New York edition with the headline: Yesterday’s News Today: Deep, Informed, Accurate and Inky. Order Reprints | Today’s Paper | Subscribe

connexionrepublics.com

29
Mar

Finding The Right Gas Company

If you live in a state where the natural gas market has been deregulated, you have the ability to choose from certified natural gas providers to supply your energy. There are a lot of options, so selecting the best one for you can feel a bit challenging. Follow these simple steps to determine your priorities and narrow down your list of natural gas suppliers.
Do I live in a deregulated state?

Step 1: Set your priorities

Choosing a natural gas supplier is just like making any other decision – you should have your priorities in order before weighing your options. Similarly to choosing an electricity plan, finding the right natural gas provider starts with identifying what’s most important to you. Do you want to have predictable rates on your energy? Do you need the best customer service? Do you want a company that’s been around a long time and is an expert provider? Or do you prioritize clean energy? Rank your priorities from most important to least important, and be ready to apply them when comparing the natural gas suppliers on your list.insulation and minimize heat loss.

Step 2: Know your usage

If you’ve just moved to a new residence, be sure to request utility bills from the previous owner or renter. This will help you compare gas prices and understand the residence’s natural gas usage levels.
If you’ve lived in your residence for a while, you can easily and accurately calculate your average gas usage. You can also request from your utility, your residence’s natural gas usage on the coldest day of the last year.

When shopping for a natural gas provider, have these usage statistics in hand so that the supplier can accurately help you estimate what your monthly payments might be.

Step 3: Find the natural gas supplier that offers the best plan for you

Gas providers usually offer more than one pricing plan. Ask about the following to ensure you learn about all of the options available to you:

What is the ccf (cost per hundred cubic feet) or mcf (cost per thousand cubic feet) or Therm?
Do you offer fixed-rate and/or variable pricing plans?
What affects any changes to the price?
Are there any additional fees?
What are the terms and conditions?
Are there any discounts or incentives?
Is there a budget plan?
Is there an opportunity to bundle with other products and save?
What plan is best for you?

Step 4: Make sure your top-choice provider is on your state’s list of certified suppliers

Call your city to ask if the natural gas provider you’ve selected is certified. You may also double check with your state government to review the state-wide list of certified natural gas providers.
Shopping for natural gas rates?

Once you’ve selected your natural gas supplier, you’re well on your way to taking control of your monthly energy budget. Contact your utility, supplier, or your state’s public utility commission for questions.

rental homes in Sunningdale

26
Nov

3 Apps to Help You Write a Business Plan

3 Apps to Help You Write a Business Plan

If you have a killer idea for a startup, but lack the time, resources and budget to develop a business plan, a business plan-generating app can help you get your plan on paper and, ideally, off the ground.

A number of apps simplify the often tedious, complicated process of crafting a thorough bank- and investor-ready business plan. You provide the information, they organize it into a plan, and hopefully soon you’ll be in business.

Here’s a look at three apps that can help get your business plan rolling:

1. Enloop. This is an all-in-one web app that walks users through every step of creating a traditional business plan. Here’s how it works: Based on the data you enter into the app, Enloop automatically generates sales, profit and loss, cash flow and balance sheet projections for you, complete with explanatory graphs and other compelling visual elements. Enloop also provides standard, yet customizable business plan text for each section of your plan, including portions focused on key company information and financial data.

Enloop’s Free & Easy option includes a single custom business plan packaged in a clean, professionally formatted PDF file that you can download, print and share. More fully featured paid versions range from $9.95 a month to $39.95 a month and allow you to make multiple business plans. Enloop is only web-based and not yet available for mobile devices.

2. StratPad. Alex Glassey, who designed this iPad-only app, describes it as “a strategic-planning app that helps entrepreneurs with the thinking and decision-making process.” StratPad can be a smart choice for people who are writing their first-ever business plan. It is packed with several free how-to tools for beginners, including a 58-page business strategy tutorial, view-on-demand training videos, email-based customer service, and more.

A free basic StratPad edition is available for students. Paid, one-time fee plans range from $9.99 to $54.99. The more you pay, the more advanced business plan options you get. The easy-to-use app guides users through a series of simple questions and prompts. Your answers are used to develop a summary business plan, complete with revenue projections and full-color graphs and charts.

3. Business Plan Premier. This $7.99 iPad app does double-duty for users who are eager to have their business plan backed fast. Not only does Business Plan Premier help you organize and write your business plan at an extremely detailed level, it also enables you to present your finished plan to more than 3,000 high net worth potential investors, who are also members of investment research firm Ben Stein & Accredited Members Inc.

Business Plan Premier leads you through writing your prospective company’s vision and mission statements, product descriptions and marketing plans. You can also use it to complete competitive and SWOT (strengths, weaknesses, opportunities and threats) analysis, outline your management scheme, identify your startup expenses, define your target market and more depending on your needs.

Your completed business plan is exported as a Microsoft Word document that you can edit, print, email or upload to Dropbox. Business Plan Lite is the free (but much less functional) version of the app.

26
Nov

Do You Really Need a Business Plan?

Do You Really Need a Business Plan?

The experts aren’t so sure–but entrepreneurs like the founders of Roaring lion energy drink say it’s a must. here’s how to know if writing a business plan is for you.

Starting a business was the last thing on Sean Hackney’s mind when he sat down to write a business plan. Hoping to persuade a soft drink company to hire him, Hackney scripted a plan for taking on his former employer, Red Bull North America Inc. But when he showed it to his corporate attorney father and former Red Bull managing director, “they said, ‘Don’t send this to Coke or Pepsi. Start the business, and we’ll start it with you,'” he recalls.

That was in 2000. Today, the 40-year-old is co-founder and co-owner of Roaring Lion Energy Drink, a $6.2 million company in Sun Valley, California. “We’ve grown the business from a $62,000 investment to the No. 2 energy drink in bars and nightclubs,” Hackney says. The company has 32 employees, and Hackney’s erstwhile sounding boards are now his investors and co-managers. The business plan he wrote has been through numerous revisions, and today, a regularly updated marketing plan guides the company. Writing the plan, Hackney says, was “absolutely” worthwhile. “I had a lot of stuff in my head that needed [to be] put on paper.”

Clemson University entrepreneurship professor William B. Gartner believes business plans are essential. And the SBA notes on its website: “The importance of a comprehensive, thoughtful business plan cannot be over-emphasized.” But lately, questions have arisen.

In 2006, William Bygrave, a professor emeritus at Babson College and longtime entrepreneurship researcher, studied several years’ worth of Babson graduates to find out how much better those who started businesses with a formal, written plan did than those who didn’t. “We can’t find any difference,”?he admits. In other words, Bygrave and his team found that entrepreneurs who began with formal plans had no greater success than those who started without them.

For or Against

That’s hardly the final word, however. Gartner also set out to study the idea. “Going into the study, I was very skeptical about the value of business plans,” Gartner says. But after he and his colleagues looked at data from the Panal Study of Entrepreneurial Dynamics, a national generalizable survey of more than 800 people in the process of starting businesses, he found that writing a plan greatly increased the chances that a person would actually go into business. “You’re two and a half times more likely to get into business,” he points out. “That’s powerful.”

Gartner’s earlier concerns about the necessity of business plans, he says, were that they were “all talk. Our research shows that business plans are all about walking the walk. People who write business plans also do more stuff.” And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.

For his part, Bygrave doesn’t think his research says business plans are a waste of time. “We’re saying that writing a business plan ahead of time, before you open your doors for business, does not appear to help the performance of the business subsequently,” he explains.

So what would Bygrave like to see instead of a business plan? Attempts to sell the product to actual customers, even if it doesn’t exist yet. “Have you talked to a customer?” he asks. “If not, I don’t want to talk to you about the business.”

Bygrave still thinks plans help, however. Forty percent of Babson students who have taken the college’s business plan writing course go on to start businesses after graduation, twice the rate of those who didn’t study plan writing. “Even if they don’t write a plan,” Bygrave says, “they’ve had to think about how opportunity recognition fits with marketing, building the right team, making financial projections and so on.”

And a wide gulf separates having a formal written plan and having no plan at all. “Every business has to start with a plan,” says Bygrave, whether it’s a mental construction never committed to paper or a more advanced description jotted down on the back of an envelope.

The Money Factor

Skeptics and fans of business plans agree on one point: Securing funding almost always requires a formal plan. Companies funded by friends and family may not need a plan, Bygrave says, but if you go to venture capitalists, commercial banks, government-backed lenders and most angel investors, you will need a business plan.

That viewpoint gets no traction from Daniel Stewart, co-founder of Port Richey, Florida-based Envala. Stewart and his partner funded the small-business software provider, yet Stew-art still put together a business plan complete with financial projections. “We didn’t need to because we’re our own invest-ors,” says Stewart, 38,”but to be a responsible entrepreneur, you have to see things as they are.”

A primary purpose of the plan was to evaluate the feasibility of their proposal to sell online automation software to small businesses. So they created three sets of financial forecasts: a rosy picture, a more reasonable one and a disaster scenario. They also placed extra emphasis on describing the corporate culture mission. “We exist to increase satisfaction, productivity and profitability of small businesses,” Stewart says. “It was important for us to establish that [early on] when everything is uncertain.”

Planning Trends

Plans today no longer need the 20 to 40 pages prescribed by classic planners. “The shorter [it is], the better chance [it has] of being read,” says Bygrave, who recommends devoting no more than five pages to income, cash flow and balance sheets. “And don’t have any numbers in [there] you can’t explain instantaneously.”

As tools such as spreadsheets and plan writing software have grown in importance, some critics say business plans have become overstuffed with complex financials that are often backed up by little more than guesswork. “[These tools have] made it easier to produce a business plan,” says Bygrave. “But they’ve produced page after page of financials that basically came out of thin air.” As a result, investors today want fewer and better-documented financials.

“No one’s impressed by spreadsheets,” agrees Gartner. “[It’s] the action behind the spreadsheets.” By that, he means investors want to see that an entrepreneur has actually examined the market for a product or service, identified potential customers, assembled a capable team, devised a business model and more.

While investors want to see action, they don’t want to work for it. A plan today is more likely to be a modest deck of slick, colorful presentation slides than a thick stack of white paper. Digital slides are easier to distribute to a dispersed audience via e-mail and to present to large groups on an overhead projector.

But limit your presentation to no more slides than you would in a paper plan, meaning 20 or fewer. And don’t cram a lot of information on a single slide. “Just put highlights,” says Bygrave. “[No] more than six or eight lines on a slide.”

Planning for the Future

Whether plans today are long, short, elaborate or simple, they still contain the same basic elements they always have. Typically, most have an executive summary, a marketing plan, a management team description and financials (income, cash-flow and balance sheet projections).

The recent studies are hard to ignore because they’re based on reasonable samples and were performed by reputable researchers. But business plans show no sign of going extinct. Business plan competitions and college-level business plan courses are more abundant than ever. “Why do people write business plans?” Bygrave asks. “They’ve been trained to write business plans, so they do. Another cause is that investors or strategic partners insist on it.”

Hackney’s experience writing the plan for Roaring Lion convinced him of both the benefits and limitations of business planning. Simply writing a plan helped push him to start a business when he had no intention of doing so. But the plan wasn’t nearly as effective when it came to identifying and quantifying the risks and opportunities his company would face.

One problem arose when it became apparent he had overestimated the business’s revenue potential by about 500 percent. His company’s annual sales are nothing to sneeze at, but they are far less than Hackney expected in his plan.

Among other missteps, he underestimated the actual selling price of the company’s products. The economic appeal to customers is still strong, but it’s not as strong as he’d hoped. Perhaps most important, his plan didn’t recognize the amount of financial capital it would require to grow the company, which has made it difficult for him to reach those early sales forecasts.

Like many entrepreneurs, Hackney learned to write a business plan from a book. That, plus feedback and many hashing-out sessions with his soon-to-be investors and partners, produced a plan that was accurate in its basic aim: to describe a business model that would allow him to build a successful enterprise.

Today, Hackney says he’d definitely write a business plan if he started another business. But he’d be much more conservative with his financial projections and de-emphasize the use of them. “I’d make it much shorter,” he adds. “I’d deliver the core principles of what the business is founded on in such a way that the purpose would be finding money.”

26
Nov

7 Steps to a Perfectly Written Business Plan

7 Steps to a Perfectly Written Business Plan

7 Steps to a Perfectly Written Business Plan

Every business needs to have a written business plan. Whether it’s to provide direction or attract investors, a business plan is vital for the success for your organization. But, how do you write a business plan?

SBA.gov recommends that a business plan includes;

  • Executive summary – a snapshot of your business.
  • Company description – describes what you do.
  • Market analysis – research on your industry, market, and competitors.
  • Organization and management – your business and management structure.
  • Service or product – the products or services you’re offering.
  • Marketing and sales – how you’ll market your business and your sales strategy.
  • Funding request – how much money you’ll need for next 3 to 5 years.
  • Financial projections – supply information like balance sheets.
  • Appendix- an optional section that includes résumés and permits.

However, getting started can be difficult to do. So, here’s a seven steps in writing a perfect business plan.

1. Research, research, research.

“Research and analyze your product, your market and your objective expertise,” writes Bill Pirraglia, a former senior financial and management executive. “Consider spending twice as much time researching, evaluating and thinking as you spend actually writing the business plan.”

“To write the perfect plan, you must know your company, your product, your competition and the market intimately.”

In other words, it’s your responsibility to know everything you can about your business and the industry that you’re entering. Read everything you can about your industry and talk to your audience.

2. Determine the purpose of your plan.

A business plan, as defined by Entrepreneuris a “written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement.” However, your business plan can serve several different purposes.

As Entrepreneur notes, it’s “also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road.” That’s important to keep in mind if you’re self-funding or bootstrapping your business. But, if you want to attract investors, then your plan will have a different purpose and you’ll have to write your plan that targets them so it will have to be as clear and concise as possible. When you define your plan, make sure you have defined these goals personally as well.

3. Create a company profile.

Your company profile includes the history of your organization, what products or services you offer, your target market and audience, your resources, how you’re going to solve a problem, and what makes your business unique. When I crafted my company profile, I put this on our about page.

Company profiles are often found on the company’s official website and are used to attract possible customers and talent. However, your profile can be used to describe your company in your business plan. It’s not only an essential component of your business plan, it’s also one of the first written parts of the plan.

Having your profile in place makes this step a whole lot easier to compose.

4. Document all aspects of your business.

Investors want to make sure that your business is going to make them money. Because of this expectation, investors want to know everything about your business. To help with this process, document everything from your expenses, cash flow, and industry projections. Also don’t forget seemingly minor details like your location strategy and licensing agreements.

5. Have a strategic marketing plan in place.

A great business plan will always include a strategic and aggressive marketing plan. This typically includes achieving marketing objectives like;

  • Introduce new products
  • Extend or regain market for existing product
  • Enter new territories for the company
  • Boost sales in a particular product, market or price range. Where will this business come from? Be specific.
  • Cross-sell (or bundle) one product with another
  • Enter into long-term contracts with desirable clients
  • Raise prices without cutting into sales figures
  • Refine a product
  • Have a content marketing strategy
  • Enhance manufacturing/product delivery

“Each marketing objective should have several goals (subsets of objectives) and tactics for achieving those goals,” states Entrepreneur.

In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of the marketing tasks for the year ahead. In the implementation section, you focus on the practical, sweat-and-calluses areas of who, where, when and how. This is life in the marketing trenches.”

Of course, achieving marketing objectives will have costs. “Your marketing plan needs to have a section in which you allocate budgets for each activity planned.” It would be beneficial for you to create separate budgets for for internal hours (staff time) and external costs (out-of-pocket expenses).

6. Make it adaptable based on your audience.

“The potential readers of a business plan are a varied bunch, ranging from bankers and venture capitalists to employees,” states Entrepreneur. “Although this is a diverse group, it is a finite one. And each type of reader does have certain typical interests. If you know these interests up front, you can be sure to take them into account when preparing a plan for that particular audience.”

For example, bankers will be more interested in balance sheets and cash-flow statements, while venture capitalists are looking at the basic business concept and your management team. The manager on your team, however, will be using the plan to “remind themselves of objectives.”

Because of this, make sure that your plan can be modified depending on the audience reading your plan. However, keep these alterations limited from one plan to another. This means when sharing financial projections, keep that data the same across the board.

7. Explain why you care.

Whether you’re sharing your plan with an investor, customer, or team member, your plan needs to show that you’re passionate, dedicated, and actually care about your business and the plan. You could discuss the mistakes that you’ve learned, the problems that you’re hoping to solve, listing your values, and what makes you stand out from the competition.

When I started my payments company, I set out to conquer the world. I wanted to change the way payments were made and make it easier for anyone, anywhere in the world to pay anyone with little to no fees. I explained why I wanted to build this. My passion shows through everything I do.

By explaining why you care about your business creates an emotional connection with others so that they’ll support your organization going forward.

26
Nov

10 Ways for Small Businesses to Dominate Local Markets

10 Ways for Small Businesses to Dominate Local Markets

There are several ways small businesses can better position themselves to compete in the local market.
10 Ways for Small Businesses to Dominate Local MarketsSmall Business Saturday (Nov. 26, 2016) is an American shopping holiday that aims to promote shopping at local businesses. Last year, it generated $16.2 billion in spending for small businesses which was a 14 percent increase from 2014. While it’s great to use Small Business Saturday as a way to increase sales, most small businesses need more consistency throughout the year to survive in the increasingly competitive marketplace. Fortunately, there are several ways small businesses can better position themselves to compete in the local market.

1. Small business tips online.

According to a study from Bazaarvoice, roughly 39 percent of in-store shoppers research a product online before buying at a physical location. This means that your small business must have an online presence in order to compete locally. How can your small business improve its online presence?

2. Improve your local SEO.

Focusing on improving your small business’ local SEO will help generate more traffic to your website and ultimately, more leads and sales for your business. With roughly 97 percent of consumers going online to search for local businesses, why wouldn’t you make SEO a priority? Additionally, Google is placing more emphasis on local search with prominent local results floating at the top of targeted search queries. With that said, Google has altered their local results to focus on the top three businesses for a specific search. This means, while difficult, getting your small business inside the top three results can result in tremendous return on investment. To get started, make sure you register your business with Google and Bing Places. Other considerations to improve local SEO include, hyper-local content creation onsite and offsite, outreach and publisher partnerships with local websites, optimizing your website (NAP, keywords, etc.) and strategic social media management among others.

3. Increase online reviews.

Online reviews are a critical part of your local search rankings, not just on Google and Bing, but also sites like Yelp and Facebook. Additionally, online reviews are the modern version of word-of-mouth advertising and can persuade new customers to use your small business, or to not use your small business. In fact, roughly 67 percent of consumers reported that their purchasing decisions were influenced by online reviews. Thus, it’s important to perpetuate reviews from your customers, especially if you know they had a positive experience. Consider adding calls-to-action on your receipts or training your employees to ask for reviews on your Google+, Facebook and Yelp page.

4. Use email marketing.

Email marketing is an undervalued resource for small businesses. It gives you a scalable tool to communicate with current, previous and potential clients. In fact, it seems like most small businesses put more energy into social media than email, even though email marketing is estimated to yield three times higher results and a 17 percent higher value in conversion. Consider using a free email marketing resource like Mailchimp or Constant Contact.

5. Target paid local results.

With local search getting increasingly difficult, it might make sense for your small business to consider pay-per-click (PPC) options like AdWords. PPC is when you pay for each individual customer that visits your website after clicking a specific advertisement. The best part is, you can optimize PPC campaigns to target affordable, yet actionable keywords in specific geographical areas. PPC lets you get your advertisement in front of highly targeted keywords in your local market, which will increase your conversions.

6. Small business tips offline.

Brick-and-mortar locations are the staple of small businesses. Even in the increasingly digital world, there are several offline tactics that can help small businesses excel.

7. Become active in the community.

Small businesses are often considered to be “backbones” of their respective communities. As a result, local companies can differentiate themselves by staying active in local affairs. In fact, 82 percent of consumers consider corporate social responsibility as an important factor when making purchasing decisions. As a start, you can join your local Chamber of Commerce to find relevant events in your target market. If you really want to make a splash, consider sponsoring a local event or charity. Social activism in your local community is an excellent marketing tool and a great way to gain positive PR.

8. Target local government contracts.

The government sets aside specific contracts for companies that are designated as small businesses. If your business qualifies, you should consider going after local opportunities. Winning a government contract can provide a stable and consistent revenue stream to supplement other clients. The SBA states that the law requires the government to award 23 percent of their contracts to local businesses, which amounts to roughly $115 billion annually. Winning these contracts are not a given, and you’ll need to devote time and energy into understanding and finding opportunities, as well as creating compelling proposals. However, the risk vs. reward is substantial if you’re able to win a government contract.

9. Focus on the customer experience.

If small businesses are the backbone of a community, then customers are the heart of small businesses. As such, it is vital that your small business focus its efforts on providing the best customer experience possible. Cox reports that 90 percent of U.S. consumers frequent small businesses at least once a week. Furthermore, 63 percent of the respondents said that they feel a strong need to support local entrepreneurs. This is mostly in part to the convenience, customer service and social equity of local businesses compared to corporations. As a result, small businesses can dominate their local market by providing incredible customer service, convenient operating hours, a friendly atmosphere and the inclusion of customer opinions and feedback into strategic decisions.

10. Don’t be afraid of change.

Change is one of the hardest things for small business owners to accept. However, an inability to adapt to changing trends can kill your small business quicker than any competition can. In fact, autonomy and flexibility are two benefits that small business have over corporate competitors. The bureaucracy of larger companies can make it difficult for pivots or strategic changes, but as a small business with a typically flat management style, you are able to adapt on the fly. CRM and other integrated data systems can provide small businesses the insight needed to see trends in their operations. This will help you capitalize on opportunities and prepare for imminent threats.

Life as a small business owner can be difficult. With the saturation of local markets and the increasingly globalized economy, the external pressures forced down on small businesses can seem insurmountable. However, there are several strategies that small businesses can focus on to improve their competitive position. Remember to market yourself online, continue to improve your relationship with customers and never be afraid to change.

26
Nov

How To Write A Business Plan

How To Write A Business Plan

How To Write A Business PlanNow that you understand why you need a business plan and you’ve spent some time doing your homework gathering the information you need to create one, it’s time to roll up your sleeves and get everything down on paper. The following pages will describe in detail the seven essential sections of a business plan: what you should include, what you shouldn’t include, how to work the numbers and additional resources you can turn to for help. With that in mind, jump right in.

Executive Summary

Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. All too often, what the business owner desires is buried on page eight. Clearly state what you’re asking for in the summary.

Business Description

The business description usually begins with a short description of the industry. When describing the industry, discuss the present outlook as well as future possibilities. You should also provide information on all the various markets within the industry, including any new products or developments that will benefit or adversely affect your business.

Market Strategies

Market strategies are the result of a meticulous market analysis. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales.

Competitive Analysis

The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.

Design & Development Plan

The purpose of the design and development plan section is to provide investors with a description of the product’s design, chart its development within the context of production, marketing and the company itself, and create a development budget that will enable the company to reach its goals.

Operations & Management Plan

The operations and management plan is designed to describe just how the business functions on a continuing basis. The operations plan will highlight the logistics of the organization such as the various responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.

Financial Factors

Financial data is always at the back of the business plan, but that doesn’t mean it’s any less important than up-front material such as the business concept and the management team.

26
Nov

Business Plan

Business Plan

 Definition: A written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement .

A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term.

Your business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask. Generally, a business plan has the following components:

Title Page and Contents
A business plan should be presented in a binder with a cover listing the name of the business, the name(s) of the principal(s), address, phone number, e-mail and website addresses, and the date. You don’t have to spend a lot of money on a fancy binder or cover. Your readers want a plan that looks professional, is easy to read and is well-put-together.

Include the same information on the title page. If you have a logo, you can use it, too. A table of contents follows the executive summary or statement of purpose, so that readers can quickly find the information or financial data they need.

Executive Summary
The executive summary, or statement of purpose, succinctly encapsulates your reason for writing the business plan. It tells the reader what you want and why, right up front. Are you looking for a $10,000 loan to remodel and refurbish your factory? A loan of $25,000 to expand your product line or buy new equipment? How will you repay your loan, and over what term? Would you like to find a partner to whom you’d sell 25 percent of the business? What’s in it for him or her? The questions that pertain to your situation should be addressed here clearly and succinctly.

The summary or statement should be no more than half a page in length and should touch on the following key elements:

  • Business concept describes the business, its product, the market it serves and the business’ competitive advantage.
  • Financial features include financial highlights, such as sales and profits.
  • Financial requirements state how much capital is needed for startup or expansion, how it will be used and what collateral is available.
  • Current business position furnishes relevant information about the company, its legal form of operation, when it was founded, the principal owners and key personnel.
  • Major achievements points out anything noteworthy, such as patents, prototypes, important contracts regarding product development, or results from test marketing that have been conducted.

Description of the Business The business description usually begins with a short explanation of the industry. When describing the industry, discuss what’s going on now as well as the outlook for the future. Do the necessary research so you can provide information on all the various markets within the industry, including references to new products or developments that could benefit or hinder your business. Base your observations on reliable data and be sure to footnote and cite your sources of information when necessary. Remember that bankers and investors want to know hard facts–they won’t risk money on assumptions or conjecture.

When describing your business, say which sector it falls into (wholesale, retail, food service, manufacturing, hospitality and so on), and whether the business is new or established. Then say whether the business is a sole proprietorship, partnership, C or Sub chapter S corporation. Next, list the business’ principals and state what they bring to the business. Continue with information on who the business’ customers are, how big the market is, and how the product or service is distributed and marketed.

Description of the Product or Service The business description can be a few paragraphs to a few pages in length, depending on the complexity of your plan. If your plan isn’t too complicated, keep your business description short, describing the industry in one paragraph, the product in another, and the business and its success factors in two or three more paragraphs.

When you describe your product or service, make sure your reader has a clear idea of what you’re talking about. Explain how people use your product or service and talk about what makes your product or service different from others available in the market. Be specific about what sets your business apart from those of your competitors.

Then explain how your business will gain a competitive edge and why your business will be profitable. Describe the factors you think will make it successful. If your business plan will be used as a financing proposal, explain why the additional equity or debt will make your business more profitable. Give hard facts, such as “new equipment will create an income stream of $10,000 per year” and briefly describe how.

Other information to address here is a description of the experience of the other key people in the business. Whoever reads your business plan will want to know what suppliers or experts you’ve spoken to about your business and their response to your idea. They may even ask you to clarify your choice of location or reasons for selling this particular product.

Market Analysis
A thorough market analysis will help you define your prospects as well as help you establish pricing, distribution, and promotional strategies that will allow your company to be successful vis-à-vis your competition, both in the short and long term.

Begin your market analysis by defining the market in terms of size, demographics, structure, growth prospects, trends, and sales potential. Next, determine how often your product or service will be purchased by your target market. Then figure out the potential annual purchase. Then figure out what percentage of this annual sum you either have or can attain. Keep in mind that no one gets 100 percent market share, and that a something as small as 25 percent is considered a dominant share. Your market share will be a benchmark that tells you how well you’re doing in light of your market-planning projections.

You’ll also have to describe your positioning strategy. How you differentiate your product or service from that of your competitors and then determine which market niche to fill is called “positioning.” Positioning helps establish your product or service’s identity within the eyes of the purchaser. A positioning statement for a business plan doesn’t have to be long or elaborate, but it does need to point out who your target market is, how you’ll reach them, what they’re really buying from you, who your competitors are, and what your USP (unique selling proposition) is.

How you price your product or service is perhaps your most important marketing decision. It’s also one of the most difficult to make for most small business owners, because there are no instant formulas. Many methods of establishing prices are available to you, but these are among the most common.

  • Cost-plus pricing is used mainly by manufacturers to assure that all costs, both fixed and variable, are covered and the desired profit percentage is attained.
  • Demand pricing is used by companies that sell their products through a variety of sources at differing prices based on demand.
  • Competitive pricing is used by companies that are entering a market where there’s already an established price and it’s difficult to differentiate one product from another.
  • Markup pricing is used mainly by retailers and is calculated by adding your desired profit to the cost of the product.

You’ll also have to determine distribution, which includes the entire process of moving the product from the factory to the end user. Make sure to analyze your competitors’ distribution channels before deciding whether to use the same type of channel or an alternative that may provide you with a strategic advantage.

Finally, your promotion strategy should include all the ways you communicate with your markets to make them aware of your products or services. To be successful, your promotion strategy should address advertising, packaging, public relations, sales promotions and personal sales.

Competitive Analysis
The purpose of the competitive analysis is to determine:

  • the strengths and weaknesses of the competitors within your market.
  • strategies that will provide you with a distinct advantage.
  • barriers that can be developed to prevent competition from entering your market.
  • any weaknesses that can be exploited in the product development cycle.

The first step in a competitor analysis is to identify both direct and indirect competition for your business, both now and in the future. Once you’ve grouped your competitors, start analyzing their marketing strategies and identifying their vulnerable areas by examining their strengths and weaknesses. This will help you determine your distinct competitive advantage.

Whoever reads your business plan should be very clear on who your target market is, what your market niche is, exactly how you’ll stand apart from your competitors, and why you’ll be successful doing so.

Operations and Management
The operations and management component of your plan is designed to describe how the business functions on a continuing basis. The operations plan highlights the logistics of the organization, such as the responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.

Financial Components of Your Business Plan
After defining the product, market and operations, the next area to turn your attention to are the three financial statements that form the backbone of your business plan: the income statement, cash flow statement, and balance sheet.

The income statement is a simple and straightforward report on the business’ cash-generating ability. It is a scorecard on the financial performance of your business that reflects when sales are made and when expenses are incurred. It draws information from the various financial models developed earlier such as revenue, expenses, capital (in the form of depreciation), and cost of goods. By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result, which is either a profit or loss. In addition to the income statements, include a note analyzing the results. The analysis should be very short, emphasizing the key points of the income statement. Your CPA can help you craft this.

The cash flow statement is one of the most critical information tools for your business, since it shows how much cash you’ll need to meet obligations, when you’ll require it and where it will come from. The result is the profit or loss at the end of each month and year. The cash flow statement carries both profits and losses over to the next month to also show the cumulative amount. Running a loss on your cash flow statement is a major red flag that indicates not having enough cash to meet expenses-something that demands immediate attention and action.

The cash flow statement should be prepared on a monthly basis during the first year, on a quarterly basis for the second year, and annually for the third year. The following 17 items are listed in the order they need to appear on your cash flow statement. As with the income statement, you’ll need to analyze the cash flow statement in a short summary in the business plan. Once again, the analysis doesn’t have to be long and should cover highlights only. Ask your CPA for help.

The last financial statement you’ll need is a balance sheet. Unlike the previous financial statements, the balance sheet is generated annually for the business plan and is, more or less, a summary of all the preceding financial information broken down into three areas: assets, liabilities and equity.

Balance sheets are used to calculate the net worth of a business or individual by measuring assets against liabilities. If your business plan is for an existing business, the balance sheet from your last reporting period should be included. If the business plan is for a new business, try to project what your assets and liabilities will be over the course of the business plan to determine what equity you may accumulate in the business. To obtain financing for a new business, you’ll need to include a personal financial statement or balance sheet.

In the business plan, you’ll need to create an analysis for the balance sheet just as you need to do for the income and cash flow statements. The analysis of the balance sheet should be kept short and cover key points.

Supporting Documents
In this section, include any other documents that are of interest to your reader, such as your resume; contracts with suppliers, customers, or clients, letters of reference, letters of intent, copy of your lease and any other legal documents, tax returns for the previous three years, and anything else relevant to your business plan.

Some people think you don’t need a business plan unless you’re trying to borrow money. Of course, it’s true that you do need a good plan if you intend to approach a lender–whether a banker, a venture capitalist or any number of other sources–for startup capital. But a business plan is more than a pitch for financing; it’s a guide to help you define and meet your business goals.

Just as you wouldn’t start off on a cross-country drive without a road map, you should not embark on your new business without a business plan to guide you. A business plan won’t automatically make you a success, but it will help you avoid some common causes of business failure, such as under-capitalization or lack of an adequate market.

As you research and prepare your business plan, you’ll find weak spots in your business idea that you’ll be able to repair. You’ll also discover areas with potential you may not have thought about before–and ways to profit from them. Only by putting together a business plan can you decide whether your great idea is really worth your time and investment.

26
Nov

Plan Your Business Plan

Plan Your Business Plan

You’ve decided to write a business plan, and you’re ready to get started. Congratulations. You’ve just greatly increased the chances that your business venture will succeed. But before you start drafting your plan, you need to–you guessed it–plan your draft.

One of the most important reasons to plan your plan is that you may be held accountable for the projections and proposals it contains. That’s especially true if you use your plan to raise money to finance your company. Let’s say you forecast opening four new locations in the second year of your retail operation. An investor may have a beef if, due to circumstances you could have foreseen, you only open two. A business plan can take on a life of its own, so thinking a little about what you want to include in your plan is no more than common prudence.

Second, as you’ll soon learn if you haven’t already, business plans can be complicated documents. As you draft your plan, you’ll be making lots of decisions on serious matters, such as what strategy you’ll pursue, as well as less important ones, like what color paper to print it on. Thinking about these decisions in advance is an important way to minimize the time you spend planning your business and maximize the time you spend generating income.

To sum up, planning your plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you’ll first need to decide what your goals and objectives in business are. As part of that, you’ll assess the business you’ve chosen to start, or are already running, to see what the chances are that it will actually achieve those ends. Finally, you’ll take a look at common elements of most plans to get an idea of which ones you want to include and how each will be treated.

Determine Your Objectives
Close your eyes. Imagine that the date is five years from now. Where do you want to be? Will you be running a business that hasn’t increased significantly in size? Will you command a rapidly growing empire? Will you have already cashed out and be relaxing on a beach somewhere, enjoying your hard-won gains?

Answering these questions is an important part of building a successful business plan. In fact, without knowing where you’re going, it’s not really possible to plan at all.

Now is a good time to free-associate a little bit–to let your mind roam, exploring every avenue that you’d like your business to go down. Try writing a personal essay on your business goals. It could take the form of a letter to yourself, written from five years in the future, describing all you have accomplished and how it came about.

As you read such a document, you may make a surprising discovery, such as that you don’t really want to own a large, fast-growing enterprise but would be content with a stable small business. Even if you don’t learn anything new, though, getting a firm handle on your goals and objectives is a big help in deciding how you’ll plan your business.

Goals and Objectives Checklist
If you’re having trouble deciding what your goals and objectives are, here are some questions to ask yourself:

  1. How determined am I to see this succeed?
  2. Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
  3. What’s going to happen to me if this venture doesn’t work out?
  4. If it does succeed, how many employees will this company eventually have?
  5. What will be its annual revenues in a year? Five years?
  6. What will be its market share in that time frame?
  7. Will it be a niche marketer, or will it sell a broad spectrum of good and services?
  8. What are my plans for geographic expansion? Local? National? Global?
  9. Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?
  10. If I delegate, what sorts of tasks will I share? Sales? Technical? Others?
  11. How comfortable am I taking direction from others? Could I work with partners or investors who demand input into the company’s management?
  12. Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

Your Financing Goals

It doesn’t necessarily take a lot of money to make a lot of money, but it does take some. That’s especially true if, as part of examining your goals and objectives, you envision very rapid growth.

Energetic, optimistic entrepreneurs often tend to believe that sales growth will take care of everything, that they’ll be able to fund their own growth by generating profits. However, this is rarely the case, for one simple reason: You usually have to pay your own suppliers before your customers pay you. This cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.

Start by asking yourself what kinds of financing you’re likely to need–and what you’d be willing to accept. It’s easy when you’re short of cash, or expect to be short of cash, to take the attitude that almost any source of funding is just fine. But each kind of financing has different characteristics that you should take into consideration when planning your plan. These characteristics take three primary forms:

  • First, there’s the amount of control you’ll have to surrender. An equal partner may, quite naturally, demand approximately equal control. Venture capitalists often demand significant input into management decisions by, for instance, placing one or more people on your board of directors. Angel investors may be very involved or not involved at all, depending on their personal style. Bankers, at the other end of the scale, are likely to offer no advice whatsoever as long as you make payments of principal and interest on time and are not in violation of any other terms of your loan.
  • You should also consider the amount of money you’re likely to need. Any amount less than several million dollars is too small to be considered for a standard initial public offering of stock, for example. Venture capital investors are most likely to invest amounts of $250,000 to $3 million. On the other hand, only the richest angel investor will be able to provide more than a few hundred thousand dollars, if that.

Almost any source of funds, from a bank to a factor, has some guidelines about the size of financing it prefers. Anticipating the size of your needs now will guide you in preparing your plan.

  • The third consideration is cost. This can be measured in terms of interest rates and shares of ownership as well as in time, paperwork and plain old hassle.

How Will You Use Your Plan

Believe it or not, part of planning your plan is planning what you’ll do with it. No, we haven’t gone crazy–at least not yet. A business plan can be used for several things, from monitoring your company’s progress toward goals to enticing key employees to join your firm. Deciding how you intend to use yours is an important part of preparing to write it.

Do you intend to use your plan to help you raise money? In that case, you’ll have to focus very carefully on the executive summary, the management, and marketing and financial aspects. You’ll need to have a clearly focused vision of how your company is going to make money. If you’re looking for a bank loan, you’ll need to stress your ability to generate sufficient cash flow to service loans. Equity investors, especially venture capitalists, must be shown how they can cash out of your company and generate a rate of return they’ll find acceptable.

Do you intend to use your plan to attract talented employees? Then you’ll want to emphasize such things as stock options and other aspects of compensation as well as location, work environment, corporate culture and opportunities for growth and advancement.

Do you anticipate showing your plan to suppliers to demonstrate that you’re a worthy customer? A solid business plan may convince a supplier of some precious commodity to favor you over your rivals. It may also help you arrange supplier credit. You may want to stress your blue-ribbon customer list and spotless record of repaying trade debts in this plan.

Assessing Your Company’s Potential

For most of us, unfortunately, our desires about where we would like to go aren’t as important as our businesses’ ability to take us there. Put another way, if you choose the wrong business, you’re going nowhere.

Luckily, one of the most valuable uses of a business plan is to help you decide whether the venture you have your heart set on is really likely to fulfill your dreams. Many, many business ideas never make it past the planning stage because their would-be founders, as part of a logical and coherent planning process, test their assumptions and find them wanting.

Test your idea against at least two variables. First, financial, to make sure this business makes economic sense. Second, lifestyle, because who wants a successful business that they hate?

Answer the following questions to help you outline your company’s potential. There are no wrong answers. The objective is simply to help you decide how well your proposed venture is likely to match up with your goals and objectives.

Financial:

  1. What initial investment will the business require?
  2. How much control are you willing to relinquish to investors?
  3. When will the business turn a profit?
  4. When can investors, including you, expect a return on their money?
  5. What are the projected profits of the business over time?
  6. Will you be able to devote yourself full time to the business, financially?
  7. What kind of salary or profit distribution can you expect to take home?
  8. What are the chances the business will fail?
  9. What will happen if it does?

Lifestyle:

  1. Where are you going to live?
  2. What kind of work are you going to be doing?
  3. How many hours will you be working?
  4. Will you be able to take vacations?
  5. What happens if you get sick?
  6. Will you earn enough to maintain your lifestyle?
  7. Does your family understand and agree with the sacrifices you envision?