Thoughts on starting a new business. Part 3

This post is part of a series. Click here to read the previous post. Click here to read the next post. Click here to read the first post of this series.

Business Plan: Theory vs Reality

Theory-Reality

In theory, every child goes to school, gets a degree and lands a job at Google.

In theory, everyone is reasonable, sympathetic, and willing to help out the fellow man.

In theory, every business starts off with a great idea and a detailed business plan to support its growth via marketing, funding, and competent leadership & management.

In theory… you get the picture.

Reality, however, rarely ever mirrors plan or theory. But that shouldn’t dissuade us from planning ahead, especially when it comes to our career path or business plan.

There are essentially 2 schools of thoughts out there when it comes to creating a business plan. One that completely disagrees and maintains that street smarts and the ability to adapt to changes alone is the key to a successful business. The other takes a more textbook and systematic approach to launching a business and requires a formal detailed business plan to manage every aspect of the startup. Most companies in fact do not have business plans. Out of the ones that do, most never revisit the business plan more than once. Most skeptics and fans of business plans will agree, however, that when funding is involved, business plans are a requirement. But that is precisely the problem, money & funding clouds their judgment and drive them to make a business plan when in reality it is so much more than a requirement your bank or investors force you to complete.

A business plan is a map, a barometer, and a thermometer. It can provide guidance,  help you understand the external trends and pressures of the market, while at the same time, revisiting it can often tell you the current health of your business versus what it was supposed to be, in theory.

Whether you are creating a business plan because you are a firm believer in it or whether you are doing it just to obtain funding from investors or your local bank, we are here to help. Encure Corporation helps individuals and businesses review and create professional and result driven business plans. With our team of seasoned professionals and the tools and resources at our disposal, we are able to offer our services to small and medium size companies in and around the tri-state area.

5 Best Practices for writing a business plan

1) Be Patient. There is a lot of information that needs to be gathered. Market research, industry’s strengths, weaknesses, opportunities and threats, current and future market trends. It takes a week or two to do proper research and editing that goes into creating a business plan. So be patient and don’t rush to get it done and over with. A business plan that gets ignored is just as well not a business plan at all. Take your time to perform proper fact-checking so that it doesn’t come back to bite you in the end should an investor raise a question about your estimates, facts or figures.

2) Be Fair. Unless you have mastered the art of nuclear fission, chances are that your business plan could always use some improvement and a reality-check. Do not be overly biased (both in favor of or against) towards your business plan. One way to do this is to write a business plan and then revisit it after a week or two with a fresh pair of well-rested eyes. Often you will find that a few facts may have been embellished just a little too far or certain topics needed to be expanded much more into detail to make an impact to someone reading and thinking of investing money in your business.

3) Be Accurate. Nothing puts an investor off like a miscalculated projected P&L or a 5-years returns chart that has the profit year over year add up to be so infinitely large that it looks like your medication for Adderall needs a revisiting. Inaccuracies in the calculations often leads the investor to question your ability at managing finances and therefore it creates doubt on whether you will be successful in running your business effectively. To overcome this consider going over the proposed numbers with a trust-worthy business partner or at the very least practice your presentation of the numbers and try to explain them to yourself in a fashion that would make perfect sense even to a novice. One way to avoid this mistake is to use a customized software solution which takes arithmetic out of the equation. We highly recommend Palo Alto Software’s Business Plan Pro. This is a software suite we use ourselves for our clients and we recommend it to all our clients.

4) Practice your pitching. Want to know a painful truth? That business plan you spent 4 weeks preparing will be skimmed through and tossed aside in less than fifteen minutes. That is about the average time it takes for an investor to sift through a business plan. About 5-10 minutes or less is what you will have to pitch your idea and make it stick. Never rely on a detailed business plan alone and  never read from the PowerPoint or directly from the business plan in front of the investor. Know your plan inside out and the only way is to practice and practice often.

5) Share your plan. No you haven’t misread that and no we don’t mean on Facebook. Most people think that business plans are always supposed to be confidential but what good is an idea that cannot stand a healthy debate or some aggressive questioning. Talk the idea through with a friend or a partner, business or otherwise. Some venture capitalists in fact recommend running the business plan/idea by a member of the opposite sex to get a different perspective.

Now that you have your business plan and ideas together and are ready to make a leap to the next step of starting your business, the next step is to choose a form of business that best suits your needs. We will have more on that in our next post here.

Thoughts on starting a new business. Part 1

Seize the Opportunity 

Starting-a-Successful-New-Business-in-2013

Everyone dreams of starting his or her own business some day. To be the boss and have more or complete control over our own financial future certainly appeals to many of us.

But like everything else, starting up your own business can very daunting by its very nature. Add to that the prospect of entering a market which already has well established competiton in it and the initial level of hope is cut down by half. Being that this is the year 2014, you can also pretty much rest assured that there isn’t any market left that hasn’t already been explored, expanded into, or exploited by someone else.

The key is, however, to come to the realization that there is always room for improvement. Regardless of whether your competition is Apple, Microsoft, BP, Tata or Tom’s hardware down the block. There is always a seat at the table when the general public is invovled.

Customers want variety and brand loyalty is never permanent. To drive this point home let’s look at an example that many of us can relate to. We either know someone who fits this category or are ourselves in it. A few years ago there was nothing better than a Sony electronic appliance on the surface of this earth it seemed. Sony’s Walkman and CDMan (If that’s indeed what it was called!?) were the stuff of legend. But look what is happening today. Customers who were once loyal to the Japanese brand of Sony televisions for decades – like Samurais were to the Shogun – are now switching over to Korean brands like Samsung and LG in droves. The reason? They do not want to be tied-down by a single ecosystem of just one brand.

Likewise, more and more companies are outsourcing and utilizing third-party vendors for many aspects of their businesses to reduce cost and also for diversification purposes. Most large companies in the U.S. today have close to or well over a dozen software packages that are in use daily ranging from ERP, CRM, reporting modules, financial modules, payroll modules, commission modules, sales modules. Name a business function and there is an off-the-shelf module for it available!

It is the very basic nature of people, especially those in the management realm, to diversify and follow the mantra of never putting all their eggs in a single basket. It sounds great on paper but in reality diversification also often-times leads to problems stemming from mismanagement.

As frequently as new business are formed, they close down. The generally accepted statistic that only 1 in 10 businesses makes it past 10 years is very real and its effects can cause major issues to companies who rely on a business model that doesn’t adapt well to change.

Being in the unified business solutions business, this is essentially what keeps our company in business. Often times we get calls from customers who are working on systems designed by companies that are no longer in the business or from customers who need to migrate data over to a new platform because the vendor will no longer support their outdated piece of software.

Business landscapes change all the time with new emerging technologies. The internet revolutionized practically every business. If not in the operations realm then at least in the marketing one. Tablets have replaced PCs and smartphones are slowly but surely replacing landlines and even computers in many instances. This entire post was composed on an LG G3 via the WordPress app (more on that later) for instance.

So the first thought about starting up your own business is to always remember that there always have been and always will be opportunities out there for your business. The key is to be at the right place at the right time, be able to adapt with the changing times, or in some instances be able to hold on long enough for the right time to present itself. More on that in our next blog post here.

Comments and questions are always welcomed.