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.

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.

Decrease COGS and Increase Profitability

Our latest Case Study shows how simple systems can be used to re-gain your profitability in your business.

We worked with a tile contractor and helped him track labor expenses more closely, improving his profitability significantly.

Read the entire case study here!

Case Study: Achieving Operational Excellence

Situation:

The owner of a carpet cleaning business wants to open another location, but spends 70 hours a week dealing with the issues in the first business, leaving him little time to devote to the start-up of the second location. The owner has 13 employees and is involved in the majority of all processes in the company.

Solution:

Over period of one year, we developed a complete operations manual, including Organizational Chart for the current business, job descriptions, as well as how-to-manuals for all jobs in the company. Anything from daily activities of the receptionist to the scheduling of the field technicians was documented in this manual. Soon, employees were able to complete their jobs without the input of the business owner, saving him many hours of work throughout each week.

Results:

1. The business owner reduced weekly hours worked from 70 to 40 for the first business, leaving him time to focus on the opening of a second location.
2. The employee manual enabled the owner of the business to open a second location with fewer headaches.
3. The clearly defined processes made it possible to cut back the office staff by one person, saving the company additional overhead of $30,000 per year. D
4. ue to better processes in scheduling and better job processes, each field technician increased productivity by 20%, resulting in higher profitability.

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!

Organizational Charts – The Map to your Organization

Whether you are running a small start-up business or a well established company with many employees, an Organizational chart is at the very heart of every business. Organizational charts serve several purposes in any business.

1. An Organizational Chart becomes the blue print for what your business will look like when you are done building it. In other words you will, at all times, know exactly what positions in your company you still need to fill, which areas of your business are overloaded, and which departments are overstaffed.
2. An Organizational Chart serves as the starting point for any operations manual. Associated with each position on the organziational chart is a job description which describes in more detail what each position is reponsible for.
3. An Organizational Chart spells out the reporting structure in your business. It shows the “Line of Command” and establishes the ground rules for who is working with who.

When developing an organizational chart you want to keep the following points in mind:

1. Don’t develop the chart based on the people you currently have working for you, but develop it with the positions that need to be filled. This becomes very important. Remember you want to build an organizational chart that shows the business as it should look, not as it looks right now.
2. While I am saying to build an organizational chart that is built on the future and not the current situation, I want to point out that you want to build it for the foreseeable future, not a far away time scale that appears unachievable. If you are a small restaurant owner, build an organizational chart for your restaurant a year from now,  before you start thinking about building one that rivals the structure of the McDonalds corporation.
3. After you draft your organizational chart with all the positions needed in your business, you can overlay your current staff onto this chart to see who is currently filling each position. At this point you may already notice the strengths and shortcomings of your current organization. One person in your company may have too much responsibility and fill in several positions in your Organizational Chart. As a result, you may want to re-assign some of this person’s tasks to another employee who has fewer tasks, or even consider hiring another person. You can develop an action plan for getting the right people in the right positions.

Operations vs. Employee Manual

The term operations manual is very often misunderstood. Often times, operations manuals are confused with employee manuals. There is a key difference between the two sets of documents:

Employee Manuals are sets of documents that describe the basics of the business and include all the general knowledge employees need to have in order to work at your company. It includes Human Resources policies and procedures, information on vacation and sick time, and other general information on the business. Usually, the employee manual is developed by the Human Resources department of the company.

Operations Manuals on the other hand focus on the positions in the company, each position’s duties and the descriptions of how each task is done. The idea of an operations manual is to create a set of documents that will enable you to systemize your business so that you, the owner don’t have to be involved in the day-to-day decisions and activities, and eventually have the real opportunity to duplicate your business.

The three key components of a basic operations manual are:

1. Organizational Chart

2. Job Desriptions

3. How-to Manuals

The benefits of developing an Operations Manual are as follows:

- Employees have clarity on their job duties

- You, the owner, don’t have to answer all questions about how to do tasks.

- You shorten the learning curve of all employees and get them working at full performance in a shorter timeframe.

- There is a very clear organization to the business, making job duties and work processes clear to all employees.

- Management of the company get a lot easier, because all day-to-day activities are documented and can be referenced by employees.

Welcome to the new Sieber Consulting Blog!

I am excited to introduce my new blog. On this blog we will post weekly updates and valuable information for small business owners. Sieber Consulting specializes in developing systems for small businesses. Anything that relates to your business to run smoother or more efficient. So, if you are interested in learning more about business plans, marketing plans, sales systems or operations manuals for your business, stay tuned, or check out www.joergsieber.com!