Announcing my new Book

I am excited to announce that my new book “Mastering Business Operations” is scheduled to hit the shelves in November. The book will provide business owners with 10 key tools to implement in their businesses to get back in the driver seat. Implement these tools and avoid the chaos and constant fire drills most business owners face these days.

Goals give you Direction!

When Alice was lost in Wonderland she came to a fork in the road. At the fork was a tree and in the tree the Cheshire Cat. Alice asked the cat, which way she should turn. The cat asked “Where do you want to go?” Alice responded: “I don’t know.” The cat responded “Then any path will get you there.”

 The same is true with your business. If you don’t know where you want to take your business, any path will get you there. It is important you determine goals in your business. Are you going to be the #1 in your industry in 5 years? Are you trying to achieve $xx by year 3? What is it you want to achieve with your company?

 When formulating your goals keep the SMART rule handy. SMART is an acronym that stands for:

 S – Specific: Your goal needs to be specific. There shouldn’t be any gray area or question when you ask yourself if you achieved it or not.

 M – Measurable: Attach some numbers to your goal. This will make it possible to determine with objectivity whether you achieve your goal.

 A – Achievable: You goal should be realistic. If you are a one person company and you are shooting to have 3,000 employees in three months time, chances are you are setting yourself up for failure.

 R – Results Oriented: When you set your goal for the business, ask yourself the question “What are you really after?” If the answer to the question is the same as what you listed in your goal, you have set yourself a realistic goal. If your answer is different, chances are you simply listed an action item as a goal. Your goal should be different.

 T – Time Bound: Give your goal a time frame to be completed by or it will not happen.

Stop Marketing in the Dark! Do Your Research!

In order to market effectively, you need to understand your market very well. A lot of business owners seem to think they can develop a product and then push it into the market place without any research whatsoever. This can be a fatal mistake for any business. Sure, in some instances this approach will work, but it is much more likely for you to be successful in your business if you first do the market research, and then start marketing your product. You will have gained a better understanding about your customers, the market conditions as well as the size of the market, i.e. your opportunity. Here is how to go about your market research:

1. Figure out who your target market is. This step may seem very easy and simple, but is more complex than you first may imagine. Let’s assume for example you are a carpet cleaning business. At first you may think your target market is any home owner or renter in your area. This is correct. However, by looking at this in more depth you may realize that a large percentage of your clients are actually families with young children or pet owners, since they have a need to get their carpets cleaned more frequently. Also, you may discover that most frequently, a female will make the call to hire a carpet cleaning company. In other words, while your target market consists of all home owners and/or renters in your area, you have several segments (young families and pet owners) to cater to with your marketing. Your marketing material can contain language and pictures that are especially appealing to those segments. Insert a picture of a cute baby or a guilty looking pet in your material and you catch the attention of your two segments.

2. Learn how big your target market is. This part of your research can be a little tricky but is crucial if you want to get a good idea about what your market potential really is. There are a lot of businesses and resources out there that can help you determine how big your target market is. For local businesses, we recommend checking with the local Chamber of Commerce for some information. Also your County offices may have some information on the local economy. The US Census Bureau publishes statistical data on the US and its regions on an annual basis. Try to find out how big your market potential really is and attach a dollar value to it. You may find it is significantly bigger than you originally thought, or that your segment is too small for your business to survive.

3. Research your competition. Next you need to know who your competition really is. First, list all the competitors that come to mind. Then do some research on the Web to see who else serves your target market with a competitive product or service. It also helps to ask your friends and family who else they think off when they think of your company. Once you have the list developed the real work starts. Try to find out as much about your competitors as possible. Here is a partial list of questions you may want to get answered: – How long have they been in business? – What are they best known for? – What are their price points? – How do they market? – What market share do they have? – What are their other products that don’t compete with you? – What are their weak points? – What are their strengths?

4. Develop a SWOT Analysis. All the research you have done about the market and the competition will be summed up in a SWOT Analysis (SWOT = Strengths, Weaknesses, Opportunities, Threats). For your own business list these four areas in a grid:

Strengths - List all the strengths your business/product/service has compared to the competition 

Opportunities – List the opportunities you see for your business/product/service

Weaknesses – List all the weaknesses you business/product/service has compared to the competition 

Threats – List all the threats you can see facing you in your company/product/service

After you are done with your SWOT analysis, you should have a very clear picture of your own opportunity. List ways you can take advantage of your strengths and opportunities. And most importantly list ways you plan to overcome weaknesses of your company and the threats it faces in the market place.

10 Steps to a Successful Business Plan

1. Layout and Structure of the Plan

You have a lot of freedom in the development of a business plan. I have seen business plans without financial documents, business plans without a marketing plan, and business plans that go into every business aspect possible. The content of the plan depends on your needs and what the recipient of the document is looking for. I suggest the following layout of a plan to start out with.

 1          EXECUTIVE SUMMARY

2          COMPANY OVERVIEW

2.1       BUSINESS HISTORY

2.2       LEGAL STRUCTURE AND OWNERSHIP

2.3       MANAGEMENT TEAM

2.4       COMPANY LOCATION AND FACILITIES

2.5       GOALS AND FINANCIAL OBJECTIVES

2.6       FINANCING BUSINESS GROWTH

3          PRODUCT AND SERVICES OVERVIEW

3.1       PRODUCTS

3.2       SERVICES

4          MARKETING PLAN AND ANALYSIS

4.1       TARGET MARKET AND OPPORTUNITY

4.2       COMPETITOR OVERVIEW

4.3       SWOT ANALYSIS

4.4       UNIQUE SELLING PROPOSITION AND MESSAGES

4.5       LEAD GENERATION STRATEGIES

4.6       1 YEAR REVENUE FORECAST AND MARKETING PLAN

5          FINANCIAL PLAN AND ANALYSIS

5.1       START-UP COSTS (APPENDIX 2)

5.2       FINANCIAL HIGHLIGHTS (APPENDIX 3)

5.3       FIVE-YEAR PROFIT AND LOSS STATEMENT (APPENDIX 4)

5.4       FIVE-YEAR BALANCE SHEET (APPENDIX 5)

5.5       CASH BUDGETS (APPENDIX 6)

5.6       BREAK-EVEN ANALYSIS (APPENDIX 7)

6          APPENDIX/TABLES

 

If you want to dive into more detail than the above outline, I suggest downloading the Business Plan template from www.joergsieber.com, which provides more detailed guidance on how to write each section of a plan.

One word of caution: Don’t write the Executive Summary of the document until you have written all the other parts of your business plan. The purpose of the Executive Summary is to provide someone with a short and precise summary of the entire document. You simply cannot write this section until all the other sections have been researched and written.

2. Research, Research, Research

Now that you have develop your outline, it is time to start researching so you don’t write your plan without much needed data.

The first section you need to research is your own business. This research will come natural to you, depending on how many pieces of your business you already have in place. You need to be able to answer questions like What are the key historical milestones of your business? What is the legal structure of your business? What are the key strengths of your management team and why did you choose them? You should also provide a short overview of the company’s facilities as well as the products and services you offer.

The second section of your plan will by significantly harder to research. Here we are dealing with your Market, Competition and Market Opportunity. Answer questions like: Who is my target market? How big is the target market and the opportunity for my company? Who are the key competitors? What are their strengths and weaknesses? What are the key opportunities for and weaknesses of my business? How will I generate leads and new business? And finally, how will I be able to generate the leads I need to get the revenue I want?

Once you have done all this research, you should be able to generate the marketing section of your business plan.

Finally, you will move on to your Financial Section, which includes Profit and Loss Statements, Cash Flow Forecasts, Balance Sheets, and a section on key financial indicators. Here it becomes very important that you understand all the expenses associated with your Marketing Strategies. Please refer to the Step called “The Financial Section” to get a better understanding of this part of your business plan.

3. Be clear where you want to take your business

When Alice was lost in Wonderland she came to a fork in the road. At the fork was a tree and in the tree the Cheshire Cat. Alice asked the cat, which way she should turn. The cast asked “Where do you want to go?” Alice responded: “I don’t know.” The cat responded “Then any path will get you there.”

The same is true with your business. If you don’t know where you want to take your business, any path will get you there. It is important you determine the goals in your business when writing your business plan. Are you going to be the #1 in your industry in 5 years? Are you trying to achieve $xx by year 3? What is it you want to achieve with your company? If you write the plan for third party investors, let them know why it is important to you that you get the money from them.

4. Be realistic with your goals

I have witnessed many business owners who have set goals that were too lofty for their current situation. While investors want to see enthusiasm in you and your plan, they don’t want to see an unrealistic picture painted in front of them. As you develop the goals for your business, make sure you believe in them and have the back-up needed to eliminate most doubts with your investors.

There is no guarantee in business, and most certainly no guarantee that you will achieve your goals, but if you set goals that are believable you will increase your chances of success significantly. Keep in mind that what is “believable” to one person, may be completely outrageous to another. You will be walking in a gray area as you develop your goals for your business plan. It will be extremely beneficial if you can find out the comfort level your investor has towards risks.

5. The financial section

This section will look different depending on whether you have a startup business or an existing business. In general, investors will be very interested in past performance of existing businesses to see trends in their financial performance. With a start-up company it becomes very important to show solid forecasts that are based on reality and not “pie in the sky”.

In general, all business plans should include the following:

-         1 Year Cash Flow Forecast

-         1 Year and 5 Year Profit and Loss Forecast

-         5 Year Balance Sheet Forecast

-         Break Even Calculation

Existing businesses also should include the following information on past performance:

-         up to 5 years of Profit and Loss Statements

-         up to 5 years of Balance Sheets

It is of extreme importance to not only show the numbers in the tables to investors, but also to point out the key trends, milestones and financial ratios to them. Usually, this is achieved by attaching the actual forecast and financial reports in the appendix of the business plan and then summarizing the key data in the Financial Section of the actual business plan.

6. Back up your numbers

As you develop your financial forecasts, it is key to be able to back up each revenue number with a way to generate the revenue. It is for this reason that we usually recommend developing a “Leads and Revenue Forecast” for a 12 month period.

This leads and revenue forecast describes to investors how many clients you will need to generate your planned revenue. It then takes the next step and tells them how many lead generation or marketing strategies you will deploy to generate these clients. It is also a good indicator for yourself if your forecast is based on reality or not.

 7. Know your audience

If you write your business plan for a potential investor to raise capital it is very beneficial to know beforehand what this person is looking for in a business plan. In many interviews with banks and investors, we found that every person is looking for slightly different things when making a decision to loan money or not.

This focus is very often determined by the investors willingness to accept risk with his investment. Some banks are not at all willing to lend money to start-up businesses because of the risks associated with a start up company. Others prefer start-up businesses because of the potentially higher return on their investment.

Some investors limit their loans to a small amount, while others eliminate small loan investments from their portfolio. Some investors are more concerned with past performance and want to see solid profits for at least three years, while other are more concerned about the thoroughness of your market research and market potential.

In other words, it is tough to please everyone with your business plan. If you want to increase your chances for getting accepted by a potential investor, try to find a suitable avenue by simply asking beforehand what they are looking for in a potential client and what they are looking for in a business plan.

8. Have a Killer Executive Summary

The executive summary is the heart and soul of your business plan. It contains all the important information a potential investor needs to make a decision. It should be the last thing you write and contain the most important information from your plan within one or two pages.

Most loan officers or investors have dozens of business plans to read each week and will only glance at a business plan’s executive summary before making a decision to read on. It is therefore extremely important for you to get their interest during these first pages of your plan.

 Keep your sentences short, highlight important facts and numbers, and include the most critical information from each section in the summary.

 9. Be enthusiastic

You are the owner of your business and should be enthusiastic about it. If you don’t believe in your product, service or business, it will come across in your plan. So, be enthusiastic and convincing in the way you write your business plan. Investors will be more likely to provide you with your needed funding if they see your business is your passion.

This enthusiasm is even more important when you present your plan to the investor. Most investors, before making a decision will ask you to present your plan to them face to face. During this meeting you will need to come across believable, professional, and convinced of your ideas and plan.

 10. Prepare a Presentation

After writing your plan, make sure you are preparing a presentation to investors. As mentioned before, most investors want to see you in person before making a decision. This meeting is your chance to show your enthusiasm for your business and answer any additional questions from the investors side.

While it is not necessary to prepare a PowerPoint presentation for such a meeting, PowerPoint slides can provide you with the needed guidance for a presentation. Most business owners are not necessarily used to presenting in front of a group of people. In fact, studies have shown that presenting ranks right next to death on most peoples list of fears.

PowerPoint has the ability to help you get over this fear and give you an outline of your presentation. In your presentation you can use the same outline as you did in your business plan.

You should have some sort of handout for your investors. This could be the set of PowerPoint slides, or a simple list of key points of the business plan. Make sure your outline contains the key points from the business plan in easy to read English.

For more information or help on writing a business plan, please contact us at Sieber Consulting at www.joergsieber.com or e-mail us at joerg@joergsieber.com. We can help you develop the business plan you need for your target audience.

Tips for addressing Venture Capitalists

The following link is to a Blog about finding Venture Funding. It is extremely helpful for those of you who are looking at obtaining funding from venture capitalists and contains some valuable tips on what to focus on before addressing your venture capitalist audience.

Robert Ochtel Blog

The REAL benefit of writing a business plan

There are two main reasons why you would want to write a business plan for your business.

1. The most obvious reason is to obtain funding from a potential investor or lender. Of course, any third party loaning money to or investing in a business wants to get a thorough background of your business and rest assured in the knowledge that you understand the market, the competition as well as the potential for success in the business.

2. The second reason is to write a business plan to help yourself find and maintain the direction you need in your business. There is no better way to fully understand your business, market and competition than by systematically going through the process of writing a business plan.

It is really surprising to me as a consultant to see how many business owners have no idea about who their competition is and how big the potential for their product or service really is. They simply don’t find the time to devote to writing a complete business plan. If that is the case, hire a third party to develop a plan for you, but make sure you play an integral part in the development of the document.

You see, a lot of people have the mindset that a business plan, once written will end up on a shelf collecting dust without ever being looked at again, and is therefore not worth the effort. But this is only one side of the story. The true value of the plan however is not in the plan itself, but in the research, the thoughts and the input the goes into the document. Just imagine how much you will learn about your business potential by developing a thorough, well-researched business plan. Again, I want to stress, that if you want to hire a third party for the development of your plan, make sure you stay involved in the process, so you can get as much out of the research as you possibly can.

Special Summer Offers from Sieber Consulting

Just a quick announcement to let everyone know we have announced our special Summer offers at Sieber Consulting.

Now is the time to take advantage of the expertise we offer on developing a great sales process for your business!

Check it out here: http://www.joergsieber.com/Special_Offers.html

SBA announces Ranking of lenders by State

The SBA released their annual ranking report of banks based on their lending practices. While loans between $100K and $1M have been signifiantly reduced, there was a significant increase in loans below $100K. In the study you can find a ranking of banks by state. This should help you identify financial institutions that may be more likely to approve a loan request.

Remember, a well written business plan goes a long way in ensuring an approval of your request! Sieber Consulting can help you with this. www.joergsieber.com

Here are some key findings taken directly from the report:

“The number of loans under $100,000 increased, while the number of small business loans of $100,000 to $1 million decreased by 23.3 percent, from 2.9 million to 2.2 million over the June 2007-June 2008 period. The total amounts of small business loans in all loan sizes increased in a range between 3.2 percent and 6.8 percent (Table B). Large corporations continued to increase their use of external funds and contributed the most to total business borrowing because of continued increases in investments and in merger and acquisition (M&A) activity between 2007 and 2008. Borrowing by large corporations in loan sizes over $1 million increased to 12.2 percent, compared with 11.7 percent in the previous year. “

Read the entire study here: http://www.sba.gov/advo/research/2008.html

A Must Read for Business Owners

If you want to learn more about systemizing your business and getting it to the point where you can point employees to a set of documents to get answers to their questions, you may want to read the “e-Myth Revisited”. I consider this book the bible of systemization. In it Michael Gerber spells out why systems are so important in any business. Gerber also explores the reasons why so many business owners don’t want to build systems in their own companies. If you only have one business book in your book shelf get this one!

5 Keys to a Great Business Plan

There are many reasons why you would want to write business plans, but the number one reason to write an outstanding, comprehensive business plan is to raise more money from potential investors.

 

When looking for money from outside investors, it is more important today than ever before to separate yourself from the crowd. A well written, comprehensive business plan will convince your potential investors that you are serious about your business, and that you know what you are doing. 

 

The article below highlights 5 Keys to writing an effective business plan. Follow these  keys and you are one step closer to developing a plan that will get the results you want. 

 1. PLAN AHEAD – The mistake most business owners make when writing a business plan is to rush the development of the document. Procrastination is the number one killer of a well developed business plan. You will not be able to develop a well thought-out document if you wait until the day before your meeting with the potential investors. Develop a plan before you need it and keep it up-to-date with regular reviews.

 2. DO YOUR RESEARCH – Market research, business intelligence and SWOT analyses need to be performed if you want to be successful with your business plan. Be prepared to answer questions on how big your market is, who your target market is, what consumers are looking for when they are dealing with you, how much consumers are willing to pay for your product or service, and who else is offering similar products or services. You will not be able to answer these kinds of questions without properly researching your market through the Internet, industry organziations or phone calls.

 

3. DIFFERENTIATE YOURSELF -  After you have done your research, you need to differentiate your business, product and service. Investors are not interested in putting their money into Me-Too organizations who have nothing different to offer than an already well established competitor. Lack of differentiation leads to price competition and eroding margins, making it more difficult for investors to achieve a positive return on their investment. When differentiating your product or service, make sure you are differentiating yourself with valuable arguments that your customers care about.

4. KEEP IT REAL – A major part of your business plan is your sales forecast and other financial projections. When developing your projections make sure they are as realistic as they can be. A conservative forecast backed up with a detailed plan on how you can achieve these numbers is more valuable to investors than a pie-in-the-sky projection that lacks any footing in reality. When you develop sales figures, translate them into the number of customers you need and explain where these customers will come from. In other words Your Marketing Plan should back up your sales forecast.

 

5. THE HEART OF YOUR PLAN: EXECUTIVE SUMMARY – After you have written all your essential parts of the business plan, set aside sufficient time to write an executive summary that crystalizes all the essential elements of your plan. Put yourself in the shoes of your investors. They review dozens of plans every day and most likely only read executive summaries. It is aboslue key for you to grab your reader’s attention with the executive summary.