How to Develop a Successful Business Plan for a Startup Despite a Low Budget

Do you already have a business idea or concept but confused about how to transform it into that ‘megabusiness’ of your dream? Have you been ruminating over what business to venture into despite limited funds to usher you into the desired financial breakthrough? Or you have a low budget for that new business and don’t know how to make it work? Do you fall into any of the aforementioned categories? Then this write-up is for you.

The good news is that a limited takeoff capital is not as much of an impediment to succeeding in a new business as a lack of ideas, thorough planning and a motivation for success.

Sadly, countless businesses have failed to thrive because of the erroneous impression that a robust starting capital is all there is to floating a successful business. But they got it all wrong!

Henry J Turner, Executive Director of Small Business Development Centre Network at Howard University says, “Don’t start until you have a business plan. The reason a large number of small businesses don’t survive beyond three years is the lack of financial planning.” Hence, if you are willing to start a business that will be sustainable in the long-term, having a good business plan will definitely not be a bad idea!

What exactly is a business plan? What are the potential benefits? How can you develop one? These are some of the questions this article seeks to address with a view to giving you the necessary edge over competitors.

Simply, a business plan is a written document that gives a vivid description of your business. Arguably, the potential benefits of a well-developed business plan cannot be overemphasized.

1. It helps to clarify your business ideas and define your goals and objectives.
2. It provides a road map for running the business.
3. It serves as a template for progress evaluation.
4. It helps with obtaining bank loans or financial support from investors.

A top-notch business plan will usually contain the following sections:

1. Executive summary: This part of the business plan highlights your product (and what makes it special) and features identified market opportunities, funding requirements and expected returns. If you are interested in financial support, then this section must be enticing.

2. The Business: Here, you need to give background information about your business idea in terms of how long you have been nurturing it, how much is on ground already, the proposed ownership structure and any relevant experiences you may have.

How will your product stand out? What do customers stand to gain from patronising you?

3. Markets and Competitors: This is where you focus on your target customers and why they should patronise you and not other competitors in the market that render a similar service or sell similar products.

4. Sales/Marketing: How do you intend to meet specific customer needs? What marketing strategies do you plan to employ? For instance, flyers, posters, internet via websites, blogs, social and print media and so on.

5. Management: You are to outline the management skills within your team, stressing areas of strength and weakness. It also includes the proposed remuneration of team members.

6. Operations: What facilities will your business need? For instance, if you are considering going into web design, all you need may just be a good computer with reliable internet connection and you can work from the comfort of your room.

7. Financial forecasts: This is where you reel out the figures – a cash flow statement showing how much money you expect to flow into and out of your bank account and when you expect your business to break even.

8. Financial Requirements: Here, you are to state how much funds your business requires and the likely source(s) of funds – bank loan/overdraft, personal savings or support from investors. State what the funds are to be used for ranging from procuring equipment, debt financing to advertising.

http://www.prosper.com is a tested source of microloans.

9. Risk assessment: It is very important to help minimize problems in the event that something goes wrong. It also gives credibility to your business.

10. Appendices: In this section, you may include other relevant information like detailed CVs of key personnel (especially if you need external funding) as well as market research data and product literature.

In conclusion, although the task of developing a sound business plan may appear daunting, it is usually worth the effort as it keeps your vision clear, helping you maintain focus on key areas of the business all the way.

It’s high time you unleashed that business idea of yours and who knows? It may just be the next big thing. Welcome to the business world!

Freelance Business Opportuniy

Most people aspire to own their own businesses without clearly identifying the best way to do it. The ever-changing needs of consumers makes it even more complicated for entrepreneurs to select the right business to own. Most people already know that there’s a world of possibilities out there for anyone who wants to start a business. The question is: how can you possibly narrow the possibilities down to find the type of business that’s right for you? Business success research proves that most businesses do not survive for more than three years after inception due to poor business selections at the outset. It’s paramount to choose a business which you understand from an operational standpoint or for which you have a particular passion.

Types of Business Structures

There are different business structures to choose from: sole trader, partnership, limited liability, trust, proprietary limited company, incorporated association and co-operative. There are also a few complex structures like a joint-venture (JV). You may want to contact me personally to discuss the most appropriate structure for your situation. For the purpose of this business guide, I will concentrate on sole trader, partnership and limited liability. You will need to decide on which business structure best suits your business and personal needs.

Business categories

Businesses are mainly categorised as either product or service type. If you are a trained professional, such as an accountant, architect, or a specialist on any ailment, your business is naturally going to revolve around the professional services that you provide. However, there are many professionals who also have the opportunity to offer related products if they choose to do so. For example, if you’re an Information Technology (IT) specialist, you may decide to sell computers, software and hardware.

For untrained professionals, the key to deciding whether to focus on products or services when thinking about starting a business is in determining where your true talents lie and what you most enjoy doing. When making a decision, do not base it simply on whether or not you enjoy selling or are good at it. You will be involved with sales no matter what type of business you start.

Once you have identified the business to own, you will then have to make an informed decision whether to start one from scratch or buy an existing business.

How to Write a Business Plan

A business plan is a road map which will stipulate how you shall steer your company to achieve the goals and objectives which you have set. Most people, especially those starting a sole proprietorship business, do not prepare a business plan. For those who have done so, most of them are sub-standard. Preparation of a standard business plan will help make your business successful.

A business plan is quite often the entry-level requirement to getting government money, investor capital or bank loans. Although you may have a complete picture of the business in your mind, investors and bankers need to see if you really have an understanding of the business. The business plan also provides you with a blueprint to succeeding in business. It provides you with the direction of your company and also serves as a guidepost for your employees.

The business owner’s primary job is to manage and run the business. The term “manage” implies planning and execution. The very process of business planning helps reduce risk. Successful entrepreneurship is often the ability to build a business by taking calculated risks. If you’re putting your life savings on the line or borrowing other people’s money, it is your responsibility as a business owner to not take foolish risks. The business planning process does not guarantee success, but it surely decreases the odds of failure.

The business plan has different sections which I will discuss in greater detail.

Executive Summary and Introduction

  • Write the name of the business, its principal operating address, and any other information which would inform people where your business is located
  • Identify the business ownership. Is it a sole proprietor type or is it owned by a number of directors? Include percentage of ownership for each of the directors if it is a limited liability company
  • Briefly explain the goods or services which you offer
  • Specify the market which you intend to reach and service

Vision, Mission, Objectives & Values

Vision: This is the broad goal which you want to achieve, a statement of your strategic intent – a picture of the future. For example, if your company is to provide Cloud-based internet services in Bangkok, your vision could be: “To provide the cheapest and fastest Cloud internet connectivity in Bangkok.”

Mission: A mission statement should identify the core values to which the business is committed, the core purpose of the firm, and visionary goals which the business will pursue to fulfil its mission. The mission should mirror the vision, and elaborate on what shall be done to realise the vision. Using the example above, an appropriate mission would be, “Strive to offer cheap and first quality internet connectivity by investing in the latest technology and innovation.”

Objectives: These are the pre-set goals which the company should achieve. The objectives are grouped into two categories.

I.) Short term objectives: These are the goals which the business should achieve within the first year following business commencement; and

II.) Long term objectives: These are goals which the business should achieve within five years after business commencement.

Values: These are the principles, morals and ethics which the business strives to uphold. For example, how the business is committed to customer satisfaction and how it practices a culture of excellence.

Evaluate your business statement by answering the following questions:

· Is it longer term, but still time-defined?

· Is it clear on the major benefit(s) that you seek to achieve?

· Does it provide for some method of measuring success?

· Does it omit specific references to “how” things will be done?

A good mission statement will contain the following components:

· Specify target market/s and potential customers

· Identify principal products and services

· Specify the geographic domain

· Identify core technologies

· Contain an expression of commitment to survival, growth and profitability

· State the key elements of the owner’s business philosophy

· List the company’s core values

· Identify the desired public image

An effective values statement will include:

· Approximately 5-7 core values

· Values that can be demonstrated as actions or behaviours

· Values that are aligned with business processes or people

Products & Services

  • Identify in detail all the products and services which the business offers
  • Explain how each and every product or service shall be composed and made available to the intended customers
  • Explain the use and benefits of your key products and services

Revenue Generation

This section will identify all the revenue generation activities on which the business shall capitalise to generate revenue that will sustain the business. This is evident when a professional decides to work as a freelance expert. This section is customised based on the specific products you sell or the particular services you provide. For example, a photographer who owns a studio and sells photographic materials, might list the following:

  • Camera sales
  • Picture frame sales
  • Film sales
  • Camera memory card sales
  • Photograph/Video coverage charges

Capital Cost

Capital is defined as the initial investment which you shall put into the business before you commence operation. It is also defined as assets available for use in the production of further assets, wealth in the form of money, or property owned by a person or business, and human resources of economic value.

This section includes some basic accounting, but you don’t need an accounting degree to write this. It has simple arithmetic which is easy to understand. Just list all the expenses which you expect to incur before you commence operations.

Research & Development

All businesses need to continually improve their products, services and business processes in order to anticipate and respond to the ever-changing needs of customers, especially in line with today’s technology boom. This means investing time and money into researching these needs, then developing products and services to meet them. Research and development together with the design of new and modified services will form an essential part of making your business more profitable and productive. Then you can be sure that your career as a freelancer will be successful.

Great Steps To Selling Your Business

Part of being a serial entrepreneur is starting businesses, achieving growth, selling the business for a big profit, and doing it all over again. But what if you are a beginner, what steps do you take to ensure that you get maximum amount for your business? The most common reason people sell businesses is to get money in their pocket. Keep in mind that timing, and the state of your business impacts the sales price. Taking the following steps will ensure that your business is sellable, and that you get top dollar for it:

  • Solid Business Model & Sustainable Strategy
  • Proper Financial Records
  • High Cash Flow
  • Good Employee Relations
  • No Impending Lawsuits
  • Good Reputation

Someone buying a business has a long-term horizon in mind, and therefore seeks a businesses that rests on solid ground, that offers long-term growth with a high probability of returning back a good rate of return on their invested capital. The shrewd investors will have the wherewithal to determine whether your business model is sustainable, so it is important to that your business encompasses a solid structure. Some of the best business are the once that anyone can run, some investors purchases business as an investment, they are not necessary looking to take over the day-to-day management.

There are varying degrees between investors, however sooner or later they all conduct a due diligence of your business prior to committing to a purchase. They review your financial statements, verify the accuracy of your finances, require forecast reports, review the management structure, review insurance policies, look for impeding lawsuits, they review contracts that the business has in place, and learn about the methods in which you provide your services to generate revenue. What they are after is to see if the business has any vulnerability that can cause issues once they have made the acquisition.

Verifying your financials gives the investors’ confidence that your business has a model that can generate revenue, forecasting will help them determine long-term sustainability that can sometimes be validated by past performance as long as the fundamentals of your business remain unchanged. A business that has a good reputation translates into great growth prospects. Stressing current financial performance to an investors sometimes will not be as effective as stressing the growth potential that the business has. You as the business owner need to have a clear and concise way of demonstrating and communicating this potential to the investor.

The last thing to remember is the importance of cash flows the business generates, and how they will have higher weight on determining the price of the business than anything else. Investors want to see a decent rate of return on their money, and a quick payback period. Given that cash flows will hold higher weight on the price of the business, it is important that your business is generating optimum cash flows. Make no mistake, that a business with $100 million in revenue vs. a business with $10 million in revenue which both generate $1 million in cash flows without any growth prospective are likely to be worth the same price if the business is valued by strictly using cash flows as the basis of the valuation.

Use the following as a principle in how to build a sellable business, in that any investors will purchase an efficiently run business that can generate optimum cash flows, has good growth prospects, a good management team at the helm, minimal vulnerabilities, good reputation, and an overall solid structure. Your shrewd investors will dig deep into your business, be ready to demonstrate that your business is solid all around, as it will also ensure that you get the best price for your business.