Planning

Build A Great Team In Order To Acquire Venture Funding

2005-10-05T11:02:00.000-07:00

By Don Bell

There are three key Executives needed in a company that is looking for Venture Capital. They are:

Business Manager (Chief Executive Officer, President, President/Chief Operating Officer)

Money Manager (Chief Financial Officer)

Product Manager (Chief Technology Officer, Chief Product Officer)

The Business Manager works with the Money Manager on the day to day expenses, reviews the "stored" money, but should not be worrying about or working with the "stored" money. The Business Manager also should be there to close the deals with the clients, and should be looking for new clients and partners, as well as managing the day to day operations of the company.

The Money Manager should not be the same person as the Business Manager. Why should the Money Manager be different than your Business Manager? Checks and Balances. You want to have two people keeping an eye on your money. Your Money Manager should be a person that knows how to "store" money for future use, keep good tabs on how the money is being used every day, work with the Sales staff on sales process of selling the product(s), and report to the Business Manager on how the money is being used.

The Product Manager, who may be the Business Manager, assuming (s)he is able to do both, which is often not the case, builds the product(s) that the company sells. (In many cases, the Product Manager is the "Original Founder" and should be the person that finds the Business Manager who can run the business while the Product Manager builds and manages their product dream.) This person should be solely worried about building and enhancing the product, and should work with the Business Manager and Financial Manager to insure they are working within budget, and to the best interest of the company.

Having a Chief Financial Officer that knows what to do when the Venture Capitalist comes to the table with $10,000,000 (and that does happen folks, more and more Venture Capitalist are going away from Milestone based funding, as they have found that instead of looking out for the final product the development team is only looking for milestones, often slowing down development!) is key to many Venture Capitalist agreeing to place money in the company. This person needs to be able to invest or “store” the money in such a way that it is somewhat safely bringing in interest (better than sitting in a bank hopefully), and they need to be able to manage moving money around at the right time for interest, as well as clean cash flow.

In summary, when you are putting together your Executive Team, you need to insure you have a strong Chief Executive Officer, Chief Financial Officer, and Chief Product Officer that will allow you to get your product(s) to positive cash flow in the most expedient manner.

Don is a Venture Capitalist with over 15 years of successfully funding early stage Ventures. Information on his fund can be found at http://www.tdbellenterprises.com/fund.html His company also consults start up companies on business plan development and start up strategies, http://www.tdbellenterprises.com

Business Continuation Planning

2005-10-05T10:59:00.000-07:00

By Herb Williams

As a business owner, much of your wealth is probably tied to your business. While that may help the business grow, it may also create severe liquidity problems for your beneficiaries when you die. The value of your business will be included in your estate. How will your beneficiaries get the liquidity necessary to pay taxes due?

Will they be forced to liquidate the business, or a portion of it, at a loss? Forced liquidation could have the following results:

* Sale may not return the fair market value of equipment and inventory.

* Outstanding accounts receivable will be difficult to collect.

* Intangibles - such as reputation, customer-base and location - could be lost.

* Family control of the business will likely be lost.

Without proper plannings your business may die with you. How can you help ensure the successful continuation of your business?

The Solution

Business continuation planning is an important step toward the continuation of your business. Taking the right steps now can help give you several benefits:

Provide cash to buy out a deceased owner's share of the business:

* Ensure the business retains knowledgeable and informed ownership;

* Ensure that profits benefit active, rather than inactive, owners;

* Assure a ready market and fair price for your share of the business;

* Reduce economic pressure on heirs to liquidate other assets to pay estate settlement costs;

* Minimize the potential for disputes with the IRS over the valuation of your business.

Business Valuation Helps Eliminate Potential Conflicts

The first step in the creation of a business continuation plan is the determination of the purchase price - or the fair market value - of your business. Proper business valuation can help eliminate future conflicts between shareholders and the Internal Revenue Service (1RS). lf you fail to establish an accurate value for your business the IRS will establish one for you. This may be an expensive mistake - one that costs both time and money.

Often, owners of closely held corporations have a difficult time ascertaining what value the IRS might use for their business for federal tax purposes. Essentially, they use four methods for calculation purposes:

* Book Value

* Capitalization of Earnings

* Discounted Future Earnings

* Years Purchased Method

Funding the Buy-out

A business continuation plan isn't worth the paper it's written on unless a source of funding exists for the buy-out.. There are several options available:

* Borrowing. This can be the most expensive. Borrowing can increase the purchase price by up to 300% and put a financial drain on the business.

* Investment side fund or sinking fund. A sinking fund can be costly for a business since investment gains may be subject to taxation.

* Installment payments. Relies on making installment payments from corporate reserves when there may be better uses for the business capital.

* Life Insurance. The life insurance death benefit provides tie cash to fund the buyout. For just pennies on the dollars compared to the other funding methods, the surviving partners can plan for a means to buy out heirs and to retain control over the business, and the deceased owner's interest can be converted into cash for the heirs.

The Benefit of Using Permanent life Insurance

By using a permanent life insurance policy, rather than term life insurance, the corporation or business owners can access the policy's account value through loans and withdrawals. This can provide the funds needed for a buy-out during lifetime if you or another business owner wants to retire.

Which Business Continuation Arrangement is Best for You?

Which arrangement you chose depends upon a variety of factors, including the type of business you own - a sole proprietorship, partnership or a closely held corporation - how many owners are involved, and the owner's financial goals.

Information provided by:

Herbert R Williams. Owner, operator of: http://www.money-from-grants.com

Footprints to Success: The Five Priorities of Strategic Planning in Wholesale Distribution

2005-10-05T10:55:00.000-07:00

By Rick Johnson

Strategic planning is a management tool. It is used to help an organization clarify its future direction – to focus its energy, and to help members of the organization work toward the same goals. The planning process adjusts the organization’s direction in response to a changing environment. Strategic planning is a disciplined effort to support fundamental decisions and actions that shape and guide what an organization is, what it does and why it does it, with a focus on where it wants to go and how it is going to get there.

Discipline is a prerequisite to this process because it requires laser-like persistence to bring about a productive strategic planning initiative. The process raises a sequence of questions that helps planners examine current reality, test assumptions, gather and incorporate information about the present, and perform trend analysis on the future industry environment.

Fundamental decisions, actions and choices must be made in order to develop a plan that provides the “Footprints to Success.” The plan is ultimately no more, and no less, than a set of decisions about what to do, why to do it, and when and how to do it.

The scope of the strategy development process for any distributor is dependent upon individual business needs. The strategic planning process is a time and resource-consuming endeavor that involves many people in the organization. This process includes both tactical and strategic application.

A critical factor in developing a strategic plan is looking at the end game first. Just exactly what do you want your company to be when it grows up? Ask yourself the following questions from the perspective of looking five years into the future.

1. What markets will your company be serving five years from now?

2. What products will you be distributing?

3. Who are your primary competitors?

4. What are your strengths?

5. What are your competitors’ strengths?

6. How has your marketing strategy changed?

7. What are your core competencies?

8. What is the size of your revenue stream?

9. How is your revenue stream segmented?

These are just a few sample questions, but don’t stop there. After you’ve tried to visualize your corporate profile five years in the future, the next step is scenario planning. It’s the old “What If” analysis. What if you lose your major product line? What if your three biggest competitors become part of a consolidator roll up? What if you dramatically change your product offering so it doesn’t even resemble the industry you represent today? How will e-business impact your strategy? Recognize that an e-strategy should not exist in isolation from your overall company strategy. Remember that e-anything is only a tool while your company vision is the guide on how you use your tools.

Follow the Strategic Thinking Process

Strategic thinking by a strategy team leader provides a platform for the distributor that identifies the “end game” vision, determines core initiatives to achieve the vision, develops associated SIPs (Strategic Implementation Plans), and coaches the executive strategy team in preparing a presentation of their strategic document to the ownership or Board for approval. After approval is granted, this document becomes the basis for launching the total company planning process.
Tactical issues such as sales strategies, performance accountability and compensation issues may also be included.

The Strategy Development Process

Phase I: Company Internal Survey

Preparation

A web-based survey is developed focusing on all aspects of the organization. This generates valuable, precise feedback from the employees. This survey is synthesized, analyzed and discussed at the strategy kickoff meeting.

End Game Definition

Through the use of brainstorming and scenario planning, the CEO and ownership create a picture of what the company will be and how it will function 5 to 10 years into the future. This process can be as simplistic as developing a well thought out visionary mission statement to doing actual “what if” scenario analysis identifying specific desirable future objectives.

Phase II:

Kick off Strategy Development Meeting – End Game Presentation

The CEO/Owner presents the end game analysis developed to the strategy team. Open discussion may or may not occur at this juncture. However, further discussion will take place after the CEO excuses himself from the meeting. This discussion will be moderated by a facilitator to get consensus of the end game by the strategy team. The end game may be challenged only if another alternative is offered.

Survey Presentation

A copy of the completed survey is handed out. A facilitator presents the analysis of the survey identifying key issues. A discussion of the issues is conducted but the discussion is controlled and kept informal without trying to solve world hunger at this one-day meeting.

Strategy Development Kickoff

A brief 60-minute strategy planning presentation is conducted by the facilitator to walk the participants through the process. The end game exercise is discussed and defined. This is meant to explain the beginning of the process. After the plan is completed a presentation will be made to the ownership, President and Board, gaining approval of the strategic plan prior to actual launch and execution of the strategy.

Doing nothing is not an option

As we’ve discussed, strategic planning involves anticipating the future environment and creating an end game analysis so the decisions are made in the present. This means that over time, the organization must regularly perform trend analysis in order to make the best decisions it can at any given point – it must manage, as well as plan, strategically.

Strategic planning is not a substitute for the exercise of judgment by leadership. Ultimately “the buck stops somewhere.” The strategic planning process does not make the organization work – it can only support the sound judgment and reasoning skills that people bring to the organization.

Strategic planning is a creative process. The fresh insight it engenders might very well alter past initiatives. Planning also consumes resources which are precious commodities. It can be an overwhelming and daunting task, but it is a process that eventually defines the direction and activities of the organization. Despite its overwhelming nature, the benefits of planning can far outweigh the hard work and pain involved in the process.

I cannot emphasize enough that the true value of a strategic plan is not in the document itself. It is in the process of creating it, involving many of your employees from the bottom up. This empowers them to be more effective and better-informed leaders, managers and decision makers. The time devoted to the planning process varies from organization to organization and you must decide how much time you will devote to the kick off planning process meeting. This can take the form of a two-day retreat or it can be an extended process. The organization will begin to realize benefits from the start. Fundamental benefits to the planning process include:

• A framework and a clearly defined direction with unified support

• A clear vision and purpose that is owned by all employees

• Commitment to the organization and its goals by the employees

• Set priorities that match company resources

• Trend analysis that creates confidence in the ability to take risks

• Accountability

Readiness Factors

The planning process is a major endeavor and timing is critical. There are certain organizational elements that must be in place in order to ensure that the planning process will provide the maximum benefit to the organization. You must clearly understand the organization’s current state and readiness to engage in the planning process. There are a number of preparatory steps that should be concluded prior to the start. An internal honest-gut-check assessment is recommended. Preferably an outside consultant with a fresh pair of eyes does this. Additionally, as mentioned earlier, third party customer, vendor and employee surveys should be conducted. Other items to secure at the onset include:

• A commitment on the part of executive management and ownership

• Resolution of all crises and life threatening issues

• Ownership and board support

• A commitment of necessary resources

• A willingness to think outside the box and to look at new approaches to performing and evaluating the “business”

• A basic understanding of scenario planning

The key resources required for planning include staff time, executive management time and finances (e.g., market research, consultants, etc.).

Staffing demands include:

• Collecting and analyzing data

• Scenario planning

• Engaging key stakeholders

• Gathering historical financial information, projecting future budgets and cash flow projections

• Analyzing options and consequences for potential organizational and program strategies

• End game analysis

Project Management

Project management becomes critical to the strategic planning process. Execution is the key to success. People have different expectations when they hear the word “planning.”

Everyone must understand and share the same set of expectations. It is very helpful if one or two key staff members are skilled in project management.

A team leader will facilitate the development of a work plan which is an outline of the steps and activities that will take place during the planning process. The plan specifies the tasks, outcomes and resources to be expended, as well as the people responsible for each phase of the process.

How do you get started?

1st Priority:

If you have determined your readiness factors through assessment and you have performed the necessary preparatory research, then you are ready to launch the process. The following items should become your first priority.

• Create a Planning Committee

• Assign a team leader

• Identify specific ongoing initiatives

• Clarify roles (who does what in the process)

• Identify any additional research or outside resources necessary to assist you during the process

2nd Priority:

The second priority is to create the end game vision with clarification from ownership and the executive staff. The core strategy statement is an introductory paragraph that clearly defines the end game in understandable and measurable terms; it lets the reader know where the company intends to go. The end game must communicate the essence of the organization. Articulating the end game indicates your focus and purposefulness. The end game and its clarifying core strategy statement should contain:

• Purpose – why the organization exists and what it seeks to accomplish

• Business – the main method or activity through which the organization tries to fulfill this purpose

• Values – the principles or beliefs that guide an organization’s members as they pursue the organization’s purpose

• Specific-long term financial objectives

The core strategy statement summarizes the what, why and how much of an organization’s objectives. It presents an image of the character, the culture and the core values of the organization.

3rd Priority:

The third priority entails performing the S.W.O.T. analysis (strengths, weaknesses, opportunities and threats). A S.W.O.T. analysis means obtaining current information about the organization’s strengths, weaknesses and performance information that will highlight the critical issues that the organization faces. These become key issues the strategic plan must address. These could include a variety of primary concerns, such as funding issues, new program opportunities, changing regulations or changing needs in the client population, and so on. The point is to choose the most important issues to address. Critical constraints should naturally emerge from this process. Identifying critical constraints is the primary reason for doing a SWOT analysis.

4th Priority:

The fourth priority is to begin to develop departmental initiatives required to support the end game.

Strategies, goals and objectives may come from individual inspiration, group discussion, formal decision-making techniques and so on – but the bottom line is that leadership agrees on how to address the critical issues.

This can turn into a negotiating process and eat up considerable time and flexibility. It is possible that new insights will emerge which change the thrust of the end game. It is important that planners are not afraid to go back to an earlier step in the process and take advantage of available information to create the best possible plan.

“Changing the end game is not a crime.”

5th Priority:

The fifth priority and conclusion to this explanation of the process is producing the completed, documented plan. The end game has been articulated, the issues identified and the goals and strategies agreed upon. This step essentially involves putting all that down on paper. A planning consultant can be used to draft the final document and submit it for review to all key decision makers (usually the board, CEO and ownership). This is now the beginning of the process of developing individual departmental business plans congruent to, and supportive of, the strategic plan. These business plans should include departmental budgets.

Conclusion

Strategic planning involves looking at a longer time horizon, identifying future trends and developing action plans based on the highest probabilities. A good strategic planning process will enable a business to anticipate changing trends and implement actions that will enable them to gain or maintain competitive advantage. Add scenario planning and they can be ready for just about any consequence the market may throw their way.

Developing a well thought out strategy that involves much of the entire organization provides the “Footprints to Success.” It is now up to the executive team to lead the organization along the path these footprints follow.

Dr. Rick Johnson (rick@ceostrategist.com) is the founder of CEO Strategist LLC. an experienced based firm specializing in leadership. CEO Strategist LLC. works in an advisory capacity with company executives in board representation, executive coaching, team coaching and education and training to make the changes necessary to create or maintain competitive advantage. You can contact them by calling 352-750-0868, or visit http://www.ceostrategist.com for more information.

Rick received an MBA from Keller Graduate School in Chicago, Illinois and a Bachelor's degree in Operations Management from Capital University, Columbus Ohio. Rick recently completed his dissertation on Strategic Leadership and received his Ph.D. He’s also a published book author with four titles to his credit: “The Toolkit for Improved Business Performance in Wholesale Distribution,” the NWFA & NAFCD “Roadmap”, Lone Wolf-Lead Wolf—The Evolution of Sales” and a fiction novel - “Shattered Innocence.” Rick’s next book due to be published in November is titled; Lone Wolf – Lead Wolf, The Evolution of Leadership.

Creating A Business Plan For Your Business

2005-10-05T10:54:00.000-07:00

By Shaunta Pleasant

The preparation of a detailed and complete business plan is a necessary first step toward creating a thriving and profitable business.

A business plan is a necessity for any startup business, and it will be essential in order to get the financing that is needed, or to attract the business partners and investment that will be needed by the fledgling company.

==A Business Plan Is Not Just For A Startup Business ==

Even though business plans are most frequently associated with startup companies, they are also important tools to help existing companies grow.

As companies grow, they often require additional financing in order to buy necessary equipment, hire qualified team members, or move on to a larger office space or warehouse.

When these opportunities for growth occur, having a good business plan in place will make it easier for the company to get the capital it needs to thrive.

== A Good Business Plan Is A Great Capital And Management Tool ==

In addition to its usefulness as a capital tool, a good business plan is a great management tool.

Writing a business plan forces the management team to focus on the future of the company, and to quantify its goals and past achievements.

== Some Of The Things A Business Plan Will Include ==

A properly prepared business plan will of course contain information on what the company does, details on all products it produces and services it provides, the mission statement of the company, the key challenges and opportunities facing both the market segment and the company, and of course a thorough market analysis and break-even analysis.

A good business plan will also include information on the key members of the management team, including copies of their resumes and thorough information on their relevant experience and qualifications.

The management team of a company is crucial to its success, and it is vital that any prospective investors or financiers have a thorough understanding of how the management plans to run the company effectively.

If the business plan is to be used to obtain financing for new capital equipment, new office space, or other growth opportunities, it is also important for it to contain a section detailing how this new capital investment will help the company grow its revenues.

An analysis of what the company will look like with its new product line up and running, or its new location chosen, will be vital when convincing investors to invest their hard earned money in the venture.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan a
http://www.business-plan-made-easy.com

Writing A Music Business Plan For Your Business Growth

2005-10-05T10:52:00.000-07:00

By Shaunta Pleasant

For those interested in the music business, few things are as exciting or as challenging as opening their own music business. There are many facets to the music business, from acting as agent to the hot new music group to running a successful outlet selling new and used musical instruments.

==The Music Industry==

The music industry offers some unique challenges and some great opportunities, and the savvy businessperson can take advantage of those challenges and opportunities to create a thriving business even in the most difficult of climates.

Before opening the doors of your great music store, or taking the new band to the top, however, it will be necessary to create a solid business plan in order to attract financing, partners and investors.

No businessperson will invest in a new music business without a thorough understanding of that business’s prospects for success. A business plan is a way to communicate the goals of the business and to quantify its financial needs and prospects.

== What Should You Include In Your Business plan ==

Many new business owners are unsure how to write a business plan, or what that business plan should include. Every business plan will be different, and the business plan for a new music business may look quite different from that of a new accounting business.

That having been said, however, there are certain elements that all business plans have in common, and certain things that they all must include.

Some of the required elements of every business plan include:

What the business does. Any potential investors will of course want to have a thorough understanding of the purpose of the business, and, most importantly, how it plans to make a profit.

The mission statement of the business, a mission statement is most commonly a simple one page document which details the purpose of the business and the business philosophy of its owners and management.

Information on the experience and qualifications of the management team, this is one of the most important parts of any business plan, and it is particularly important for those opening a business in the music industry.

The management team is a key to the success of any business, and it is important that the team be able to guide the business to profitability.

== The Challenges Facing The Music Industry In General==

A discussion of the challenges facing the music industry in general and the business in particular; it is important that the business plan include a discussion of the ever changing nature of the music industry, both the challenges created and the opportunities provided.

It is important to detail how the nature of the music industry will affect the prospects of the company as well.

Starting a music business is not easy, and it will require perseverance, hard work and of course long hours and substantial capital investment. The rewards of a successful music business are great, however, and well worth the risk and the time invested.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan a
http://www.business-plan-made-easy.com

Writing A Restaurant Business Plan To Help Your Business Grow

2005-10-05T10:48:00.000-07:00

By Shaunta Pleasant

At one time, every chef has dreamed of opening his or her own restaurant. Indeed, owning a restaurant of your own can be a great way to put yourself squarely in charge of your own financial future.

There is a good reason why owning a business remains such an enduring American dream. There is a freedom that comes with knowing that you are responsible for your own future success.

== Things To Consider ==

For those considering opening the perfect restaurant, however, there are many things to consider. The failure rate for new businesses is notoriously high; an this is true for newly opened restaurants as well.

Therefore, it is very important for the potential business owner to spend as much time and effort preparing and creating a business plan as they do finding the perfect location and the best restaurant ovens.

== The Strengths And Weaknesses Of The People In The Business ==

It is important to take stocks of your own individual strengths and weaknesses when creating that business plan for the new restaurant. For instance, if your strengths lie in the financial field, you may be able to create the financial and budget portions of the business plan on your own.

The potential restaurant owner will likely be able to detail the actual equipment that will be needed to open the restaurant, as well as the monthly rent or mortgage for the location of the restaurant.

== Seeking Out Assistance ==

When it comes to some other parts of the business plan, however, the entrepreneur may need to seek some outside assistance.

For instance, few restaurant owners double as tax or legal experts, so it is important to seek qualified, independent help when preparing the legal and tax portions of the business plan.

== The Key To Getting Financing ==

A solid business plan is a complicated document, but it is an important one as well. The properly prepared business plan is the key to getting the financing that will be needed to get the restaurant doors open.

A business plan will also be important when seeking private investors or business partners. Any savvy businessperson will want to look carefully at the business plan before deciding to give up their hard earned money.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan a
http://www.business-plan-made-easy.com

Basics For Writing A Business Plan

2005-10-05T10:46:00.000-07:00

By Shaunta Pleasant

Just about every nine to fiver has dreamed of leaving the world of office politics or the factory floor behind and starting a business of his or her own.

There are many reasons why owning a business is such a common dream. For one thing, owning a business puts you in solid control of your future and your earning power. Instead of tying your financial future to the fortunes of another, an entrepreneur takes matters into their own hands and takes charge of their financial future.

== Making Sure Your Business Is Successful ==

It is a good idea to make sure your business is successful before you quit your day job. Why not work on your present job and build a part time business on the side?

Of course starting a new business is never easy, and the failure rate for a new business has historically been high. It is vital, therefore, to create a solid, detailed and complete business plan before quitting your job and striking off on your own.

== Financing Your Business ==

A business plan is a very important document, and it is necessary in order to obtain the financing that every new business will need in order to get off the ground.

It is the rare business that can get up and running without outside financing, and a business plan is an absolute necessity in order to obtain that needed financing.

== Researching The Business You Plan To Start ==

When it comes to writing your business plan, it is important to thoroughly research the business you plan to start.

== Things Your Business Plan Should Include ==

The business plan should include information on such things as the annual operating budget of the business, the proposed expenses of the business, any equipment needed to run the business successfully, and the proposed location of the business, including the amount of the rent or mortgage payment.

In addition to the basic financial information, it is important that the business plan contain information about the partners of the business, including their areas of expertise and length of business experience.

The successful business plan will also include relevant information on specific challenges faced by the particular industry, including any specific legal challenges or tax ramifications.

Starting a new business is exciting, but it can also be nerve wracking and stressful. It is important, therefore, to do as much research as possible, and gain as much knowledge as you can. Only by garnering a thorough understanding of the business world and your place in it can you enhance your chances for success in today’s competitive world.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan a
http://www.business-plan-made-easy.com

How To Write A Business Plan for Your Business

2005-10-05T10:44:00.000-07:00

By Shaunta Pleasant

A business plan is a very important document, both for new business and existing ones. While many people think of business plans as important only for newly created startup companies, the truth is that a quality business plan will also be very important to obtain financing to expand the business and help it grow.

The typical business plan will help a new business look ahead and prepare for success, and it will help an existing business assess their past and plan their future.

A well prepared business plan can help the owner and managers of the business properly allocate precious resources, focus on the key issues facing the business, and prepare for future challenges and opportunities.

== A Business Plan Is Vital In Order To Get A New Startup Or Existing Company Off Of The Ground And Moving Forward==

Of course a business plan is also vital in order to get a new startup company off the ground.

At a minimum, a properly prepared startup business plan will include a summary of what the company does, the mission statement, a thorough market analysis, the key challenges and opportunities facing the sector in general and the company in particular, and a quality break-even analysis.

== A Business Plan Can Help Attract Lenders, Investors And Potential Business Partners To Help Finance Your Company==

It is vital for the startup company to have a quality business plan in order to attract lenders, investors and potential business partners.

That is because no investor will agree to invest in the business without having first reviewed and verified the information contained in the startup business plan.

All business plans, both those for startup companies, and those for existing organizations, will need to include such components as a description of the company and what it does, the products it manufactures or the services it provides, the outlook for the market, company forecasts, a detailed financial analysis of the company, and resumes of its key personnel.

While the actual format used for a business plan will vary quite a bit, all good business plans will contain at least this basic information.

== A Description Of Your Management Team Is A Vital Part Of The Business Plan ==

The description of the management team is a vital part of the business plan, as the management of the company is a key component of its success.

Also important are things like the cash flow of the company, its debt to revenue ratio, and other financial data.

In addition, if financing is being sought for a specific purpose, it is important that the business plan include information on how the proposed equipment will be used, and how it will benefit the company and help it grow.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan a
http://www.business-plan-made-easy.com

Consolidation in the Software Industry is Hardly New: Obsess About It or Risk Losing it All

2005-08-31T03:32:00.000-07:00

By Kathleen Brush

Some analysts credit [Larry] Ellison with anticipating the consolidation in the enterprise software industry and leading the charge. Ellison ‘called a major shift in an entire market, which was impressive.’(1)

Anticipating consolidation? Calling a major shift? Didn’t Microsoft start as a PC operating system vendor in 1975? In the eighties they owned the desktop, today they’re across the enterprise. Computer Associates began with a sort program in 1976. Now its product suite offers one-stop shopping for managing the enterprise. And in 1973 SAP was selling an accounting package in Germany. Today its software automates the global enterprise from the shop floor to order fulfillment. Isn’t predicting consolidation in the software industry about as prescient as predicting that the sun is going to rise in the morning?

Consolidation is common in many industries, but three factors make the phenomenon of consolidation in the software industries, (FN 2) an ongoing repeatable event. The first factor is the natural evolution of software products and industries. New software industries start by delivering solutions to niche markets. This is, however, only the evolutionary starting point. Every industry has finite growth, and niche opportunities reach their limit quickly. Once the confines are actualized, a company, to continue growing, must expand their product’s capabilities by reaching into another industry to consolidate/converge additional functionality.

The second factor is software to software interconnectivity. Interconnectivity makes it so simple to converge products from one software industry to the next, it encourages consolidation. Open systems, service oriented architectures, programming interfaces and programming languages were created to facilitate the interconnection of diverse software products, making the process of expanding growth-promising functionality by consolidating products relatively simple.

The third factor: high-margin products and receptive investors, makes other industries envious of software. Margins often create huge war chests, and aggressive investors can create bank vaults that offer ready financing for acquisition-led consolidation strategies that promise opportunities for growth. Consolidation, though, is not always accomplished via acquisition. New capabilities can be built internally. The problem with this approach is that most companies find building paths into new industries difficult. It does require research, resources and focused execution. It also takes time. Many companies, failing to embrace that software lifecycles are time-compressed by intense competition and advances in technology, are caught off-guard by how quickly their industry becomes saturated.

Then there is the problem of competition for internal resources. Software companies are faced with non-stop feedback from demanding customers that have an unquenchable thirst for simplifying the complexities of information technology. And all of us know that the squeaky wheel gets the grease. This variety of challenges leaves companies without sufficient time to “build” a path, making the buy option very attractive. Buying though, is attractive in its own right because it delivers instant gratification and one-upmanship. Of course, well-heeled competitors in an effort to close the competitive gap can take the similarly expeditious buy route and the process of industry consolidation is now on a fast track.

Natural evolution, interconnectivity, available financing, and customer and competitive pressures have been fueling software consolidation for decades and there is no end in sight. Its an ongoing scenario of kill or be killed. Software companies that don’t keep a current strategy for consolidating or being consolidated face extinction.

The machination of consolidation in the software industries plays out like an ongoing game of little fish, big fish. And somewhere there’s always a hungrier bigger fish (or one that wants to be bigger), who is a looming consolidator. As an industry competitor in the ongoing game of consolidation there are four possible roles that can be played: consolidatee or little fish, consolidator or big fish, niche player or puffer fish (a fish with limited appeal), and odd-man out or the floating dead fish. Companies responsibly playing any of the first three roles will select viable competitive positions for their respective roles; the fourth, and the most commonly played role of the dead fish does not.

The selection, though, of a viable competitive position is not a solitary event; it is something that has to be continuously updated as an industry progresses through its lifecycle. This is because both the nature of an industry and the practicality of any competitive position are continually changing. In the introductory phase of an industry’s lifecycle there could be a thousand viable positions. By the time the mature phase rolls around, (1) the number of viable positions will be amalgamated into a few based on superior functionality, price or markets served, and (2) an industry once focused on solving problem X is now resolving A through X.

This implies that the path from the introductory to the mature phase will be strewn with carnage, but there will also be some long-term healthy niche survivors and some big winners. The prospects for being victorious will be greatly improved with an understanding of the relationships between lifecycle phases, competitive positioning and consolidation.

An industry’s introductory phase. In the introductory phase, an industry’s early entrants lead a life of competitive luxury. Competitors are few and far between, small in size and often unsophisticated business-wise. The customers are the early-adopter types who have few expectations beyond some rudimentary solution. This leads to a situation where there can be many probable (a subset of possible) competitive positions satisfying niche needs, most of which are too small to represent viable business models. See Figure 1. (Figures did not copy correctly. Go to www.sandpiperinnovationpartners.com and select the articles page to download a copy of this article with figures.)

The various positions in the introductory phase may be more or less “equal” at this point, but this equality does not pertain to future value. Some positions will be:

(1) more appealing to consolidatees because they cater to the likely interests of future consolidators;

(2) better for building a path of continuous growth that could lead to a superior exit opportunity or a dominant competitive position and to assuming the role of a future consolidator; or

(3) superior for building a lasting profitable niche position.

In order to understand which competitive positions are best suited to achieving any one of these three outcomes, it’s necessary to identify who the future consolidators are likely to be along with their probable motivations. The future consolidators (FC) will come from two sources: (1) current and (2) prospective competitors (PCs).

Deciding which of the current competitors are candidates for FCs may not be easy because the companies in the introductory phase are often small with limited budgets and resources. However, those companies who are led by industry experienced managers with vision, who have gained early market and technology leadership, and who have sufficient access to funds are reasonable bets. The PCs, on the other hand, may be easier to spot. They’re established companies who view participating in this industry as strategically sensible, under one condition–the goodness of the industry’s opportunity must be validated. Until validation occurs PCs sit on the sidelines actively or passively tracking an industry’s prospects.

Once the future consolidators have been identified, the next step is to decide which positions these companies are likely to stake out. Once this has been thoughtfully estimated in a process that requires analyzing each FC’s possible or known product and market strategies, the information is available for the current competitors to plan the positions of their products to be an attractive consolidatee, a durable niche player targeting a position the consolidators will probably shun, or a future consolidator who now has a fair idea of how to build a defensible position.

An industry’s early growth phase. In the early growth phase life takes on a decidedly different flavor. With the industry past its validation phase, the smell of money brings competitors out of the woodwork. One of the most formidable groups are the prospective competitors, many who are now prepared to shed their prospective qualifier and make a grand entrance by acquiring a suitable competitor. PCs often have complementary products, deep pockets, big customer bases, established channels, professional service organizations, and recognized brands. Armed with these advantages, these latecomers will substantively raise the competitive bar. This process of elevating the threshold may lead to redefining the industry and will redefine what constitutes a viable competitive position (See Figure 2), and it will alter the profile of the target customer. Gone are the days when customers were few in number and happy to pay a premium for a little piece of desirable functionality. Instead, customers are increasingly numerous, and demanding more functionality. All of the changes lay the groundwork for the first wave of consolidation.

All competitors, at this point, must re-evaluate the viability and strength of their current competitive positions relative to all other competitors, including any still looming PCs, in order to assess the goodness of their situation within the modified population of role-appropriate viable competitive positions. This updated appraisal should be used to strengthen or revise a competitor’s competitive position relative to their designated role. This is achieved by reinforcing the company’s product strategy on some element of functionality or price, and/or fortifying or augmenting markets served

Shakeout – the later growth phase. During the latter part of the growth phase competition for the growing number of increasingly demanding customers can become so intense that no one’s making money. This ignites a survival of the fittest shakeout, where the competitive bar is raised still higher. The fittest will have the strongest competitive positions on functionality and/or price and/or markets served. They’ll also have the financial resources to defend their positions against competitors aggressively pricing products without regard to cost, and interlopers with crafty marketing messages and costly campaigns that dupe customer into thinking that they have the superior position.

Consolidators are now working in overdrive to secure their place as a competitor with a dominant industry position. This means that consolidatees must be working overtime to see the fruition of their objective to be consolidated. Failure to do so could turn a little fish into a floating dead fish, because the consolidatee’s solution is now priced uncompetitively and/or available as a feature of a product holding a functionally superior position.

To the survivors, go the riches. Companies that survive the shakeout will hold clearly different positions (See Figure 3), that offer a promise for profitability, and they will enjoy a respite in ruthless price competition and costly hand-to-hand combat for customers. This though should not be viewed as an invitation to become complacent for two consequential reasons. First, the survivors, in anticipation of the inevitable flattening of growth that accompanies an industry’s mature phase, will need to be working diligently to determine the company’s next new product/industry in order to ensure continued growth. Second, survivors must support their positions against onlookers looking for openings that arise from arrogance or apathy and the actions of other survivors who will soon become frustrated by the leveling of growth and view one final round of consolidation as a means to buy revenue. Beware. Consolidation in this case is not a strategy for sustaining growth. You can consolidate mature A and B, but in the end you have mature AB, because the size of the world is constant. You can ask HP’s former CEO, Carly Fiorina, about the limits of consolidation as a growth strategy.

Conclusion. Only companies that can continually stake-out and restake-out competitive positions that are valued by the inevitable consolidators, or create and reinforce the position of consolidator, or target profitable niche markets will survive. You can’t avoid the underlying theme of consolidation that is constantly at work as software executives aggressively endeavor to execute strategies to secure an ongoing healthy existence, best the competition and deliver growth that will endear them to their shareholders.

Footnotes

1 Pimental, B. (May 6, 2005) San Francisco Chronicle.

2 The definition of an industry, as used here, is an adaptation from Michael Porter (Competitive Advantage, 1980, The Free Press, NY). It is the sum total of all companies offering products that solve a similar customer need (the direct and indirect competitors) and all other companies that exert influential forces on the success of the competitors. Defined in this way it is easy to see how the umbrella software industry is composed of many distinct software industries, and why search engine software does not compete with computer aided design software.

Kathleen Brush is a turnaround and strategy consultant with http://www.Sandpiperinnovationgroup.com

Business Process Methodologies

2005-08-31T03:28:00.000-07:00

By Meryl K. Evans

I've either been involved with or held a process-related role since 1994. It started in the government with TQM (Total Quality Management). Then before I left the government, I worked with ERWin and some process standard model -- I've forgotten its official name. We had pages and pages of flows that were not easy to follow.

In 1997, we worked with a fancy software application that was not user-friendly and spit out huge process maps. In 1998, I joined another company and the department had its own process for managing process additions, changes, and deletions. The organization got much bigger and then we dove into CMM.

I've written several articles on process.

I bring this up because Will pointed me to this, which led to my finding Katie's version of RUP:

Step 1: Write about running really fast.

Step 2: Go and draw a plan of the racetrack.

Step 3: Go and buy really tight lycra shorts.

Step 4: Run really, really, really fast.

Step 5: Cross line first.

Unfortunately, the outcome of RUP is that you end up with extremely well documented TERRIBLE designs.

This blog has the best quote:

"Process won't help you if you suck. It will just make you suck more repeatably."

I believe process is important and necessary. Documenting everything doesn't help because no one studies the document. We're too busy with our own little world. It's the new employees who benefit most.

Anyway, templates are useful to ensure you consistently document with every project and remember all the components. If you can make it better, do it! There's always a better way of doing something. That's why we have CPI: Continuous process improvement. The hard part is finding an effective way to do things and documenting it.

Meryl K. Evans is the Content Maven behind meryl's notes, eNewsletter Journal, and The Remediator Security Digest. She is also a PC Today columnist and a tour guide at InformIT. She is geared to tackle your editing, writing, content, and process needs. The native Texan resides in Plano, Texas, a heartbeat north of Dallas, and doesn't wear a 10-gallon hat or cowboy boots.

Business Plans Keep You On The Success Course

2005-06-27T02:32:00.000-07:00

By Marianna D'Ambrosio

Where would your business be without a proper plan? A business plan sets the direction for the future of the business. It gives the business owner or manager a sense of guidance, listing the goals and objectives of the business from the start.

Writing a business plan requires your attention; a successful business plan cannot be rushed. Once a concept for a business has been developed, looking at the many facets of owning and operating your business is the next most crucial step. Often, your local county council will be able to assist you with gathering the required information of a legal aspect, as should your local business enterprise people. The balance of the work will be up to you! You will need to research products for your business to sell, at the same time as researching other enterprises that may be in immediate competition to you. In addition, you need to research the marketplace to see whether there is a need for your business service or product.

With the research out of the way, sitting down to write a business plan requires focus. Your business plan will become the bible of your business for at least the next 3 to 5 years so it is important to make it clear, concise and comprehensive. Most enterprises will complete a SWOT analysis to determine their strengths, weaknesses, opportunities and threats of the business. While the business is in infancy, brainstorming would be the most accurate way of performing the analysis, as the business would not yet have customers and profitability would not yet have been experienced. However, it is very important to remember that a good business plan is flexible and can be changed as your business experiences grow.

After completing a SWOT analysis, you will need to create your business name if it has not already been determined, as well as your vision and values, your business goals and long term purpose and how you will achieve all of this when the business is up and running. Writing each thought down regardless of how insignicant you feel it is will allow you to collect everything pertinent to your business for easy reference when needed. Who knows, the thought of today may turn into a million dollars in a short time! A business plan is the roadmap to a successful business!

Don't let the small stuff get in your way of taking control of your future. Remember - It's All Small Stuff!

The author has found that most business owners have great ideas and creativity. They just need the clarity of what direction to head to. She has helped thousands of entrepeneurs become profitable over the long haul.

Marianna D'Ambrosio is founder of FEDE Business an excellent resource site dedicated to information on business.

In Business Planning, Competition is Good

2005-06-24T22:29:00.000-07:00

By Dave Lavinsky

When developing the competition section of your business plan, companies must define competition correctly, select the appropriate competitors to analyze, and explain its competitive advantages.

To start, companies must align their definition of competition with investors. Investors define competition as any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes firms that offer similar products, substitute products and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

In identifying competitors, companies often find themselves in a difficult position. On one hand, they want to show that they are unique (even under the investors’ broad definition) and list no or few competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the company’s products and/or services.

Business plans must detail direct and, when applicable, indirect competitors. Direct competitors are those that serve the same target market with similar products and services. Indirect competitors are those that serve the same target market with different products and services, or a different target market with similar products and services.

After identifying competitors, the business plan must describe them. In doing so, the plan must also objectively analyze each competitor’s strengths and weaknesses and the key drivers of competitive differentiation in the marketplace.

Perhaps most importantly, the competition section must describe the company’s competitive advantages over the other firms, and ideally how the company’s business model creates barriers to entry. “Barriers to entry” are reasons why customers will not leave once acquired.

In summary, too many business plans want to show how unique their venture is and, as such, list no or few competitors. However, this often has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customer need to support the venture's products and/or services. In fact, when positioned properly, including successful and/or public companies in a competitive space can be a positive sign since it implies that the market size is big. It also gives investors the assurance that if management executes well, the venture has substantial profit and liquidity potential.

Since its inception, Growthink Business Plans has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. For more information please visit http://www.growthink.com

The 7 Critical Steps to Formulating Your Annual Strategic Business Plan

2005-06-22T23:05:00.000-07:00

By Graeme Nichol

Businesses tend to avoid doing their annual business plan thinking that it is an arduous task that does not accomplish much. Formulating your annual plan is, however, critical to your business success and if done correctly should be quick, easy and generate bottom line results.

Rather than creating a business plan that achieves no results, other than to gather dust, you should be writing a strategic and operational plan. The words ‘strategic’ and ‘operational’ are important as they give purpose and results to the plan. Your annual plan needs to be strategic so that you know where you are going and what you would like to achieve from your business or division. The plan needs to be operational so that it will tell you how to get there. It will determine the strategies and goals that need to be achieved to reach your end point.

Strategic business planning is about deciding on the future you want for your business or division and then deciding how you intend to obtain that future. If you have been in business for a number of years and your results each year are much the same as the year before then obviously something will have to change if you would like to see an improvement. It comes down to the saying: If you keep on doing what you have always done you will get what you have always got.

The steps we outline below are perhaps unconventional to people familiar with business planning, but then most business plans don’t deliver results. All too often business plans are created out of a corporate requirement rather than a focused result. This system of business planning has been proved to deliver results for over 20 years. Try something new and you may be surprised by the outcome.

To achieve results it is important that each step is well thought out and no step is omitted. Equally important is that the steps are completed in an open and collaborative environment that encourages learning and new ideas.

Step 1 – Vision and Mission Statements
Businesses and divisions tend to ignore the importance of their vision and mission statements. These statements should tell you where you are going and why you are in business. If you don’t know why you are in business and why someone would buy from you, then your clients and customers will not know either and will go to your competition.

A vision statement should paint a picture of the business you would like. It should get you thinking about your business and dreaming about what is possible. You can’t exaggerate your vision so go wild and have large dreams. You won’t know where it will take you unless you give free reign to those ideas and get excited.

A vision statement can contain what you would like to see in revenue in a number of years. You could want to become a “world leader” in something, or become a “specialist” in something else. What would you like out of your company? Let it be more specific than flowery language that sits in your entrance foyer.

A mission statement should answer the question as to why your business or division exists. Why would someone buy your product or service? What makes you different from your competition? Who are you selling too? What problem are you solving? Keep your mission statement short but answer why you are in business. Nike is a good example – ‘Do it” Who needs more?

Ensure that your mission statement supports your vision. Ensure that it is concise and unique to your business. Try and capture your competitive edge and unique selling proposition in a statement that motivates.

Step 2 – Celebrate Successes
We tend to be quick to criticize, slow to praise. But by recognizing your successes, you increase your confidence to move on to make new things happen. What we have failed to accomplish always stands out in our minds, but our successes are where the opportunities lie.

Take some time to think about what you achieved in the last year. Whether it was reaching a goal you had set or handling a crisis that arose. A thank you from a client indicates a success as does appreciation from your staff. Make a list of all the successes you achieved and find ways that you can expand on those achievements.

Step 3 – Learn from Failures
It is also important to examine where we missed the mark and then identify what didn’t work. If you do not analyze your failures they will probably occur again as you do not give yourself the opportunity to learn from them. You are your own best teacher, the best source of your own wisdom. We never really need advice and hate it when we get it because we hate being told what we know already.

Make a list of your failures and mistakes and for each examine why it failed and how you can prevent the failure in the future. What needs to be changed? What needs to be put in place? What is missing?

By examining both what worked and what didn’t work, you can find the lessons that you need to learn. You can then identify opportunities and the way forward.

Step 4 – A New Paradigm
Using steps 2 and 3 to analyze where you succeeded and where you failed you will then be able to discover if there are any common factors that cause you to succeed or fail. You might find that your failures are all in a specific situation or there is some other common factor. This will tell you how you limit yourself by what you assume to be true. Everyone has assumptions about their truth and these assumptions are usually not true but only serve to limit your true potential.

Complete the following sentence … “I’d love to ____, but I can’t because I’m/we’re _____. What are the words in the second blank? This is an example of a limiting assumption. The second blank need not be about you but could be about your market, your clients, your competitors etc. To move forward and achieve your vision these limiting assumptions need to be changed, you need to take responsibility for where you are.

Change your limiting assumptions to empowering perceptions. Find a way around the external factors you feel are limiting your business or division. There are no “cant’s”, only new alternatives and new possibilities. Create a new paradigm.

If you really are not able to get around a “can’t” then you need to examine how important this factor is to your business and therefore whether you are in the right business.

Step 5 - Values
By understanding your values you will understand what motivates you. Your company and business goals need to reflect personal goals as well. If not this misalignment will cause discontent and poor performance as staff will not align with the goals. You will only be able to achieve your goals successfully if they are supported by your values. Think about what motivates you, what gets you out of bed in the morning. Make a list of the values you cherish or wish to abide by. Prioritize them. Be clear about what makes you feel good about yourself. What value does that represent?

If your business supports your values, such as honesty and integrity, it has a greater chance of success than one that requires you be dishonest on a daily basis.

Step 6 – Strategies to Success
Strategies define how you plan to grow your business and achieve your vision over time. They are critical to setting direction and keeping your business on track. Strategies are often industry specific and if you follow the core strategies of your industry your business will have a greater chance of success.

Create your strategies based on opportunities and threats that your business faces. Think about what is critical to growing and operating your business and achieving your vision.

Remember that you can’t be all things to all people and you should therefore specialize in what you do. Strategies can include topics such as technical knowledge, reputation, visibility, quality, employees and service.

Select up to 5 topics that are critical to building your business and achieving your vision. Formulate a strategy statement for each topic and ensure that it is easy to understand and results in growth and profitability.

Step 7 – Specific Goals
Allow each of the first 6 steps to shape your goals. Write a short list of what you want to achieve in the different areas of your business. Keep your vision in mind so that you shape your goals to achieve that vision.

Goals differ to strategies in that goals should always be SMART goals:

Specific/Simple
Measurable
Attainable
Relevant
Time-focused

Strategies are big picture items that work towards your vision. Goals should have number and dates in them to serve their purpose. If goals are not SMART goals they are not specific enough and will not provide focus on the tasks to be achieved.

Goals can be formulated for each area of your business such as financial, marketing and sales, human resources, operations etc. Ensure that meeting these goals will achieve your vision and mission.

As goals are measurable they can be graphed and also broken down in to weekly or monthly goals. If you are trying to increase sales over a one year period take the amount that you trying to increase it by and make smaller goals to achieve on a weekly or monthly basis. The good thing about graphing them is watching them go up!

Conclusion
For an annual strategic business plan to deliver results it needs to be used on a weekly basis. Nothing new will happen if you put it on your shelf and forget about it until next year. Every week or month (depending on your business) you should evaluate the goals you set for yourself and your business:

• Did you achieve them?

• If not, what was the problem? Can you recover and move forward?

• If yes, congratulations are in order

• Do you need to change any goals? Have you shifted your focus since your plan?

Living by your plan will keep you focused. It also ensures accountability in a team setting and therefore improves performance and productivity.

One word of caution however, using these 7 steps in a team environment requires open communication and contribution from all members. If you are unable to generate open communication in your team, then facilitation by an outside person can be invaluable.

There are a number of excellent systems on the market that can facilitate this business planning process. They have been proved to be affective in delivering results to companies of all sizes and in all industries. They differ in certain aspects of the 7 steps listed above but they achieve the same purpose.

Happy Planning!

GRAEME NICHOL, President, Arcturus Advisors.

Graeme Nichol has worked on 4 continents and in 117 unique businesses gaining experience in manufacturing, transportation, agriculture, communications, banking, direct marketing, consumer goods and retail amongst others. He has significant management experience and consulting experience, including Business strategy, project management, change management, big six consulting, team productivity, business productivity and quality improvement, ERP implementations.

Arcturus Advisors works with businesses and teams that are struggling to formulate a strategic plan that delivers bottom line results. Using tried and tested planning systems that have achieved results internationally for 20 years we ensure that you transform your business through focus, alignment and accountability.

Source : http://ezinearticles.com/?The-7-Critical-Steps-to-Formulating-Your-Annual-Strategic-Business-Plan&id=43238

Are You Aware of Planning in Business?

2005-06-21T23:12:00.000-07:00

By Parul Jain

Human beings are rational agents. Rationality endorses one to take up planning in every sphere of life from shifting to a new house to marriage, as well as business. A business plan is the first and most significant premise to reach and run a successful business. It is not just that capital that makes a business successful but it is also planning done in a prudent manner that plays a crucial role.

In simple terms a business plan is nothing but a written plan that delineates the monetary or the fiscal structure (an outlay)-for the purpose of either promoting an already established business i.e. to say a new venture or for starting up of a new business. Like map of a building made by an architect prior to its making demonstrates how the building will look like with all its rooms, lawns, lobby etc. similarly a business plan is a guide that presents all the details of a business- from money to the amount of people involved, from the flow of capital invested to the money expected to be accrued in the form of profits, from the predictable rate of growth to the snags one can land into.

A business plan gives an entrepreneur a fair idea of how much investment is required, in what areas and how will it lead to benefits in his business. This in turn enables him to seek loans and finances from the market. For once a business plan is made it becomes trouble-free for the individual to explain his idea (for example if he wants to launch a new product), its uniqueness and the material gains that follow from it. Such a plan well demonstrates the passage of money required to meet a horde targets that one seeks to achieve through his business. It is an easy guide that facilitates navigation to all the crucial aspects of a business like – the significance and exclusiveness of the idea (business), the chosen native place for it, market planning, the kind of consumers targeted and in what areas, approximate budget involved in promotion or growth of the business, the tentative dates to meet the targets, the key areas and factors of escalation and last but not the least the methodology adopted in this enhancement. All these therefore form the basic components of a business plan.

Besides these an effective business plan for a large scale business can also include the quality and rate of raw materials used, the cost of advertising, the prospects of export details in other countries if any, the mode of transportation-shipping etc.- the chosen companies for it etc. and the names and social status of the owner(s), the partners and the number of employees.

Apart from being a successful key to lure the investors, a business plan also aids in regulation and maintenance of the business involved. For it allows one to cross check the expenditure made once a business gets on wheels. The amount spent can be compared to the one initially thought and written and so it can be visualized against the future demands to be met. Hence the plan acts as a textbook that can always be referred to in order to recollect the preliminary figures as well as dates. In toto,

“A PERFECT BUSINESS PLAN ENSURES A LIFELONG, HAPPY BUSINESS.”

Parul jain writes about Business plan topics.

Why Create an Annual Plan?

2005-06-20T01:48:00.000-07:00

By Graeme Nichol

Can you imagine going on a road trip without knowing your destination? Or, building your house without plans? The same can be said about running your business without a plan.

They say that “If you don’t know where you are going, any road will do.” But if you don’t know where you are going how do you know when you get there? Or if the road you are on is the right road or the scenic, roundabout route?

Planning is essential if you have somewhere to go. If you want to grow your business, if you want to have more free time, if you want to introduce a new product, if you want to enter a new market.

You don’t need to plan if you have reached your destination, if your business is all you hoped it would be. BUT – have you considered that the world is changing pretty rapidly these days. Even if you are happy with what you have, your environment is changing, which, if you like it or not, is going to change your business. Therefore, we come back again to the need to plan.

What planning is NOT:

It is NOT that 120 page document you created when you tried to get funding to start your business. That document was essential to start your business and it might be useful every 5 or so years if you change your business focus but it does not work for an annual plan.
It is NOT a document that is placed on a bottom shelf and looked at once a quarter or once a year.
It is NOT a to do list
It is NOT a wish list

What is annual planning?

Annual planning is about creating a vision for the next 3-5 years and then formulating concrete plans to achieve that vision. It is about deciding on a future and how you intend to obtain that future, one year at a time.
It is about creating measurable goals that can be tracked.
It is about tracking those goals on a weekly and monthly basis so that they are actually achieved at the end of the year. Goals can only be tracked if they are measurable.
Annual planning is about understanding what is working and not working and using that to set further action plans.
Annual planning should also be able to able to monitor the performance and effectiveness of your staff over the year.

A well structured plan will also have the ability to be used as an effective monthly reporting tool by managers. It becomes the common language.

Planning is not only for whole businesses but also for business teams, divisions, projects and even individuals.

Planning brings about focus and clarity of what is to be achieved. Equally when done effectively, planning brings about alignment between team members and people become accountable for completion of their goals.

Planning brings about business success and bottom line results.

GRAEME NICHOL, President, Arcturus Advisors.
http://www.arcturusadvisors.com/

Graeme Nichol has worked on 4 continents and in 117 unique businesses gaining experience in manufacturing, transportation, agriculture, communications, banking, direct marketing, consumer goods and retail amongst others. He has significant management experience and consulting experience, including Business strategy, project management, change management, big six consulting, team productivity, business productivity and quality improvement, ERP implementations.

Arcturus Advisors works with businesses and teams that are struggling to formulate a strategic plan that delivers bottom line results. Using tried and tested planning systems that have achieved results internationally for 20 years we ensure that you transform your business through focus, alignment and accountability.

The Six Sigma Method and Design of Experiments

2005-06-14T21:23:00.000-07:00

By Peter Peterka

Six Sigma is becoming a proven approach for businesses and organizations to improve their performance. The spectrum of companies actively engaging in Six Sigma today is wide from industrials like Celanese, Caterpillar, GE, Honeywell, and 3M to service/retail organizations like Starwood Hotels, Sears, and Home Depot. Six Sigma has even started in the financial industry with Bank of America and JPMorgan Chase initiating major deployments in the past two years. Probably the most exciting area is in the public and healthcare sectors with success stories emerging from city government and John Hopkins Medical.

So what is all this excitement about? Haven’t these quality tools been around for years? Is it just the fact that people have strange names like Champion, Green Belt, Black Belt and for the chosen few, Master Black Belt? Okay, if it is not the names then what? Six Sigma’s success revolves around the fundamental elements needed for any successful organization. Six Sigma starts with a vision of delivering products and services to customers with no defects from the eyes of the customers. For companies it is vital to deliver these products and services at a profit. Once the organization has created their own vision of Six Sigma, the business leaders need to define their organization’s objectives in numerical terms. These “high-level metrics,” often called big Y’s in Six Sigma, are the foundation for identifying project y’s that Six Sigma Belts will execute projects on. With big Y’s in hand, business leaders called Six Sigma “Champions” breakdown these organizational level Y’s into smaller y’s a project leader called a Green Belt or Black Belt can work from.

So what’s next, do business leaders take a hands-off management by objectives (MBO) approach of, “I don’t care how you do it as long as you get results!”? For Six Sigma organizations the answer is a loud “NO.” Champions do care how projects are executed and have appointed highly trained Master Black Belts to assist and mentor project leaders in applying the Six Sigma method to manage their projects. I believe this is the key to Six Sigma’s success. In a past life I participated in a high-level meeting with executives from the world leader in the production of a product we all know. The purpose of the meeting and visit was to evaluate a critical new product design. All of the high-tech executives were dressed in dark Italian business suits complemented with gold and diamonds. I listened closely to each question these executives asked. I never once heard “how much?”, “when?” or even “why?” – every question was “by what method?.” Methodology is what Six Sigma is about.

Six Sigma Methods

There have evolved two key methods for carrying out Six Sigma projects. The first method is the most well-defined and works best if you have a problem with an unknown solution in existing products, processes or services. This method is called DMAIC or Define, Measure, Analyze, Improve and Control. The newest method, which is in the developing stages, is called Design for Six Sigma or DFSS. The goal of DFSS is to develop a new product, process or service that is defect-free in the eyes of the customer. A number of consulting companies have invented roadmaps for DFSS like IDOV (Identify, Design, Optimize and Validate) and DMADV (Design, Measure, Analyze, Design and Verify).

Six Sigma and Design of Experiments

Once an organization has decided on the method and the project y’s, Belts are marched off to training “waves” bringing management-approved projects to class. DMAIC Green Belt training is normally two one-week sessions separated by one month. Black Belt training waves are extended by two additional months with two more weeks of training. The emphasis during the extended two weeks of Black Belt training is often on learning more details about advanced tools such as Design of Experiments (DOE).

So where does Design of Experiments fit into Six Sigma? Six Sigma is about understanding and controlling the variation of key process variables known as inputs or x’s in order to obtain improved results on project outputs or y’s. In Design of Experiment terms these inputs or x’s are often referred to as factors and the outputs are referred to as responses. In nearly all Six Sigma projects the relationship of the project y’s takes on the form of y=f(x1,x2,...xn). Wait a minute, isn’t this what Design of Experiments is all about? Of course, for almost 100 years Design of Experiments has been proven to be one of the best known methods for validating and discovering relationships between responses and factors. In Six Sigma terms it is discovering the relationship between outputs called y’s and inputs called x’s. Today’s Six Sigma Belts are primarily taught to focus their use of Design of Experiments in the Improve phase of DMAIC and the Optimize phase of IDOV. For DMAIC Six Sigma training the most common experimental designs taught are factorial and fractional factorial designs. Some curriculums introduce response surface designs and optimization designs at a high level. DFSS includes the experimental designs taught in all levels of DMAIC training and often expands to include the concept of robust designs. As an alternative to the classical approach, there are also a number of consulting companies teaching Taguchi designs as the preferred method for robust design.

Final Remarks

Six Sigma looks as though it is here to stay and even in today’s slow economy one of the few areas where there still are a number of new positions. The Six Sigma process is a great step toward creating learning organizations with its well-defined roadmaps and management structure. As with most new methodologies Six Sigma will mature and grow as it expands into new areas such as DFSS. As Six Sigma professionals learn more about the power of properly planned experiments, Design of Experiments will be integrated into most phases of the Six Sigma roadmap and not just considered an advanced tool for the improvement and optimization phases. Experienced practitioners of statistical methods like Design of Experiments should learn the language of Six Sigma and help integrate new methods into the Six Sigma process to improve its effectiveness.

Peter Peterka is the leading consultant for http://www.6sigma.us. Peter has eleven years of experience performing as a Master Black Belt, working with numerous companies, including 3M, Dell, Dow, GE, HP, Intel, Motorola, Seagate, and Xerox. You can signup for Peter's Six Sigma Certification at http://www.6sigma.us

Three Steps to Give Your Strategic Plan Traction

2005-06-14T21:20:00.000-07:00

By Shaun Murphy

We all agree Strategic Planning is a critical part of a company's success. All too often, however, strategic plans stall before they ever make it to execution - or they gradually lose momentum. The organization is then left in a vulnerable and uncomfortable position of continuing to go about its business with good intentions but no focused direction or aligned action. Move intention into action using this three step remedy.

Step 1. Accountability - Get a grip on Results

Get a grip on results by having each member clearly articulate the end results rather than just activities. We use an Accountability Agreement to accomplish this (see www.AlignOnline.com). An Accountability Agreement defines the business outcomes an individual is promising to deliver, and outlines the resources and support that he or she needs from others in order to deliver these results. An Accountability Agreement is broken down into seven areas:

Business Focus Statement - Understand your company and your role within it.

No employee should sit on the sidelines as a casual observer of an organization's success. This area focuses on the business of the company and the unique value each member brings to the organization. In short, why does the job exist and what do you bring to the table? This is then related to the role each person plays in the execution of the strategic plan.

Operational Accountabilities - Outline the end results you are accountable for achieving.

The strategic plan serves as a template to outline who is accountable for bringing about various end results of the strategic plan. Focusing Accountability for various parts of the strategic plan that the individual can significantly influence and achieve is the key to clearly articulating who is accountable for producing specific end-results.

Leadership Accountabilities - Set the tone and culture.

Integrating the leadership style into your strategic plan sets a tone throughout the organization. Leaders successfully execute the plan by focusing on the people side of their role and how they expect people to work together. Leadership accountabilities set the tone for the leadership style, and introduces the notion that "leaders model the way".

Goals- Your road markers.

Goals are specific milestones that are derived directly from your accountabilities. Goals can be described as SMART: Specific, Measurable, Attainable, Realistic and Time Based.

Support Requirements- Identify the support and resources you need.

Success in organizations demands a significant level of teamwork and reciprocity. The individual is accountable for achieving end results in a context of mutual support. No one gets anything done alone. The alignment meeting described below creates a conversation where this interdependence is made visible and negotiated.

Sustainment Plan- Plan to keep it alive.

This describes how to keep accountabilities up-to-date and focused on business results as circumstances change. As things change, agreements must be adapted, renewed and revitalized.

Positive Consequences

A job is a business bargain between an individual and an organization. To get beyond the parent/child or master/servant relationship, effective individuals bargain for what they want, and can realistically expect, through a fair and reasonable exchange.

Step 2: Alignment- Align like a laser

When all members of a workgroup have completed their individual Accountability Agreements as described above, hold an alignment meeting. This process makes difficult issues discussable. Gaps and overlaps in individual accountabilities and goals are resolved and interdependencies and mutual support is agreed upon. At the end of an alignment meeting you can revise Accountability Agreements and realign on a regular basis as circumstances change or memories of agreements fade.

Gaining traction for your strategic plan ideally begins with your senior management team. Once you've identified who's accountable, made commitments and aligned this senior group, you can then cascade it down a level at a time. The process of cascading continues until all employees understand what results they are expected to produce and how they are aligned interdependently with the rest of the company.

Step 3: Achievement Individuals usually experience immediate value from the clarity of their business bargain provided by this process. The Alignment of individuals who know what is expected of them and who know what they want in return creates a powerful force for corporate success.

About the Accountability/Alignment Process:

The process we've outlined above has been consistently successful with our clients. We've made this process available to the public through our books Accountability: getting a grip on results, and Aligned like a laser, and have recently made our online tool (AlignOnline) available to organizations and consultants who wish to use it in their consulting practice. Visit us at www.AlignOnline.com for more articles on Strategic Planning, Accountability, and Alignment and information on our books and online Accountability tool.

Shaun Murphy, Ph.D. and Bruce Klatt, M.A. are senior partners in Murphy Klatt Consulting and authors of Aligned Like a Laser (2004) and Accountability: Getting a Grip on Results (1997). They are internationally recognized experts in the field of Organizational Effectiveness whose books have sold over 100,000 copies internationally.

For more information please go to http://www.murphyklatt.com or try their online Accountability Alignment tool at http://www.alignonline.com

How to Grow Your Business by Clearing the Way to Growth

2005-06-14T21:19:00.000-07:00

By Greg Roworth

Is your business growing as fast and effectively as it could, or is it stuck at the same level it has been at for years? Research (Larry Greiner, 1972) has discovered 5 specific stages of business growth. Most business never grow beyond the second level. At this level, the business is characterised by a small group of owners (if not a sole owner), supported by a small team of people at an operational level. This describes the 90 plus percent of businesses, which have 10 or fewer staff.

Why should it be this way? The Greiner growth model describes 5 levels of growth that are characterised by the type of organisational structure and leadership style at each stage. The model describes a very obvious and practical problem that is evident in all businesses that grow over time. Growth is never simply a smooth transition from small to large. It occurs in a series of jumps from one level to the next. Growth at each level is limited by the structure and leadership style. A business can grow at each level to a certain extent, but after a while, the activity created by growth makes the structure at that level unwieldy and inefficient, limiting the growth, until the next evolution of the business occurs to solve the inefficiencies at the previous level.

The issue is not that these growth crises occur, but that there is a clear solution to these crises which few businesses take the time to discover. I am sure there are some business owners who want to keep their business small for lifestyle reasons, but I am also sure that if most business owners could find a way to grow their business beyond the current level, they would.

Most businesses that are stuck at the level where the owner(s) work in the business full time (or more) and there are a handful of employees, don’t do what it takes to overcome the growth crises that are created at the limit of growth at that level. These crises are evident in the issues of control, where the business is dependent on the skills and input of the owners for most of the results and the owners can spend little time away from the business because performance will suffer in their absence. When work increases, the informality of communication and organisation become a liability resulting in errors, delays, poor quality and unsatisfactory service. Costs blow out and profits shrink rather than grow with increased sales volumes. Many owners conclude that it was easier and more profitable running a smaller business and revert to a scaled down operation. Unfortunately, this means the business and the owners never achieve their full potential and end up living a life far below the level that could have been accomplished.

Rather than scale down, the business could continue growing by scaling up. The solution to the growth crisis at this level is very clear and the path to growth is well established by the successful ones who have taken the leap to the next level. The answer is to re-organise the business with the owners delegating more responsibility to the operator level, appointing managers to take responsibility for certain functions, combined with developing systems to assist in maintaining control.

Many businesses increase the problems at this stage when they only increase delegation without increasing control. This is the key to smooth transition through this level. Control tools provide the information to management to ensure the business performs efficiently and profitably, with adequate cash flow. This development is often beyond the skills and experience of business owners who have come from a technical background and have never had training in finance and management areas. It is wise for owners at this stage to seek professional assistance in creating and establishing effective operating systems and control measures. As the business grows, the need for greater professionalism grows as well. Owners are wise to commit to a self education program so that they develop the knowledge and skills to run a business at higher levels.

At the higher levels of growth, the crises are more evident in the leadership areas. With growth, the need for increased management and organisation grows proportionately. Sometimes businesses need to be restructured along functional lines, or sometimes organisation is more determined by geographic elements. Whatever the case, the need for strong leadership and communication with management levels about performance issues, motivation of personnel and strategic elements of the business are of greater concern than the technical issues were at lower levels. Business owners need to develop their own leadership skills as well as develop or employ highly skilled managers.

If you are frustrated that your business has the potential to grow, but can’t find the way through the current hurdles you are facing, which create increased stress, over work and performance issues, perhaps it is time you looked at changing the structure of your business and becoming more professional about how you manage it. Unless you make the changes, your business will be forever held back. You will not be capable of further growth until you re-create your business to perform efficiently at the next level. You may be held back because your current situation makes you too busy working in the business that you don’t have time to work on it, to develop new systems and controls. It is time to bite the bullet. Unless you free yourself to work on reinventing your business to clear the way for growth, you will continue to bounce up against that invisible ceiling you keep hitting, without ever being able to break through.

(c) 2005 Greg Roworth, Progressive Business Solutions Limited

Greg Roworth is the Managing Director of Progressive Business Solutions Limited, a business development consultancy firm with branches in Wellington and Auckland, New Zealand. Greg has created a unique business development program that assists business owners transform their business from a state of total dependency on them to a state where the business works so well they don't have to.

Greg is also the author of "The 7 Keys to Unlock Your Business Profit Potential," which descibes the fundamental keys a business needs to achieve this transformation. Find out more, get 2 free chapters, or buy the book online at http://www.small-business-success.ws

Succession Planning for Business - 10 Key Points You Must Know

2005-06-14T21:16:00.000-07:00

By Martin Haworth

By cranking up others development to meet your business needs, big or small, not just for right now, but for the future, you will find payoffs, big-time. Here are a few ideas to get you started.

Building Relationships
By ensuring that you have informally built good relationships with every one of your team, you will have a head start when developing the intelligence needed for effective succession planning. This is not just about the business, it is about aligning with whatever is important to each individual and showing an interest in them.

Create a Vision
Clearly understanding what ‘good looks like’ is the first stage of planning for the future. Taking the time out to develop this is well worth the effort and provides a marker against which all decisions, people or otherwise are made. If possible, involve as wide a range of people in this activity.

Right People, Right Place, Right Time - Ignore Names
Once you have your vision, deciding who is need, when and where becomes easier. It important that you focus on the facts rather than the emotion first, so that you ignore individuals in this assessment. You can fit people in afterwards, as long as they will have the capability to deliver your vision for your business. Some may be a work towards.

Consistent Performance
By considering your key people, their aspirations and expectations for the future, you will gain an insight of where your gaps might come and then you can start planning to avoid problems. This will enable you to provide for anticipated change and start developing others to cover at least. This also helps when changes happen unexpectedly.

Confidence Grows
As individuals are involved in the possibilities for their future, without over-promising, they start to want more. They appreciate learning and developing as they see what might unfold for them. As they learn and experience more, their confidence builds and they want stretching.

It’s Cultural
As your communication processes involve everyone in Succession Planning, a groundswell of positivity generates a shift in your business culture. Your people start to realise that there is more to this than a job – it’s building their feelings of self worth and future. This culture becomes just ‘the way we do things around here’ and new employees commence at a higher, different level.

Many Winners
As you start to build the capacity of those around you, there is a lot that can be delegated safely as a development opportunity, suitably supported and coached. You crate space to do the more important things in your role. They develop and build confidence. With confidence comes improved customer relationships, greater efficiencies. So managers, employees, the business and ultimately stockholders all are winners.

Time Efficient
There is a certain amount of workload involved in creating a Succession Planning process. Once these initial stages are completed, only a small amount of time outside normal activities is required. In fact, with the added skills and development of your people, far greater efficiency and effectiveness results.

Manages Performance
Using a Succession planning process sits very appropriately with Performance Management. As potential has been identified, the next steps in development are constructive and clear. The individual takes accountability for their own development and practically self-manages their performance.

Value-Creating
By using management skills far more effectively, skilling up all the people in the business and creating seamless transitions when people move on, all improve business performance. Developing the latent potential of many of your people raises the bar for their performance – it is just shifted up several notches. And ultimately with greater sales and efficiency, bottom line profit is maximised.

And with these ideas in place, you will create more effectiveness and involvement in your people - which can only be good.

Copyright 2005

Martin Haworth is a Business and Management Coach. He works worldwide, mainly by phone, with small business owners, managers and corporate leaders. He has hundreds of hints, tips and ideas at his website , http://www.coaching-businesses-to-success.com.

(Note to editors. Feel free to use this article, wherever you think it might be of value - it would be good if you could include a live link) ...helping you, to help your people, to help your business grow...

Planning for Success

2005-06-09T04:29:00.000-07:00

By Greg Roworth

Business planning is widely acknowledged as one of the keys to business success. Yet there is still a great reluctance by small business owners in this area. This is despite the fact that it can be shown that fewer business fail if they have prepared a business plan.

The following are some of the reasons given for not planning:

We have done well so far, so how would a plan help us?
I’m too busy keeping up with what we are doing now.
What if an opportunity comes up that is not in the plan?
We’re too small to worry about planning.
We can’t plan because things change so rapidly.

The problems evidenced in businesses that fail to plan are:

Being taken unaware by changes in the economy or industry,
Being reactive, always putting out fires rather than solving the cause of problems,
Lacking focus, people in the business are not sure of their real purpose or objectives,
Lack of growth, repeatedly coming up against the same problem but never finding the solution,
Disorganisation, lack of time, inefficiency.
Most of these problems are actually the result of not planning.

A business plan can assist a business to make real progress, by:

Forcing you to set goals or objectives,
Determining the business’ strengths, weaknesses, opportunities and threats,
Establishing priorities,
Finding solutions to ongoing and potential problems,
Helping you to become better organised,
Showing the way to be freed from day to day pressures.

It has been proved that businesses that plan are more successful than those that don’t. The end result of the planning process is a business with:

A definite purpose, or “mission”, understood by all employees,
Clear direction and objectives for the future,
An identifiable competitive advantage,
Well thought out strategies,
Well organised and efficient operations, and
Better chance of being successful in having consistent and controlled growth.

There are many business planning products on the market and many consultants who specialise in business planning. The benefits of creating your plan will far outweigh any costs. If you want to achieve greater success in your business, it won't happen by accident, or by continuing to do the same things that have got your business into its current state. You need to take some time out to look at your situation and to develop a plan to achieve the business you desire in the future.

(c) 2005 Greg Roworth, Progressive Business Solutions Limited

Greg Roworth is the Managing Director of Progressive Business Solutions Limited, a business development consultancy firm with branches in Wellington and Auckland, New Zealand. Greg has created a unique business development program that assists business owners transform their business from a state of total dependency on them to a state where the business works so well they don't have to.

Greg is also the author of "The 7 Keys to Unlock Your Business Profit Potential," which descibes the fundamental keys a business needs to achieve this transformation. Find out more, get 2 free chapters, or buy the book online at http://www.small-business-success.ws.