Tag Archives: SBA

Business Plan Events and Why They Matter

Back to Fundamentals, business plan, Lean Business Plan

(Note: I posted this earlier this week on the SBA Industry Word blog. It’s reposted here for your convenience.)

What do you think of when you hear the phrase “business plan?” Does that bring to mind a formal document that starts with a summary and includes modules describing your business’s products, market, strategy, team, and essential projections? If so, let me introduce you to the concept of the business plan event and explain why this is worth thinking about.

The more common business plan events

Sometimes, in the normal course of running a business, growing a business, or starting a business, you need a business plan. I refer here to situations that require showing a business plan document to somebody outside the organization.

For example, the most common business plan events are:

  • Banks often require the business plan document as part of a business loan or other commercial credit. Most SBA loan programs, which guarantee bank loans made by local small business banks, require a formal business plan.
  • Angel investors usually require a business plan from a startup as part of the process of seeking investment. Unlike the common myth, they don’t use the business plan as an introduction to a business. Instead, they use it during what they call the due diligence phase, after they’ve met with founders and had a pitch, when they study the details before making a final decision.
  • Business plans are usually part of the process of buying and selling a business. That applies to the small business transactions that happen all the time, as well as to major acquisitions by big businesses.

There are other business plan events that come up. When I started my business 30 years ago, I needed to show a business plan to my bank just to get authorized to take credit cards. And I’ve heard of business plans used as part of negotiating divorce settlements and inheritance claims.

Widespread confusion between plan and planning

If you answered yes to my question in the first paragraph above, that you do think of a business plan as something hard to do that has only specialized use, then I say you are in good company. Let me suggest that you’d be better off, as a business owner, with an attitude adjustment.

My recommendation is that you dismiss the idea of the daunting big formal business plan, but adopt business planning instead. The distinction, in my mind, stands out with the famous quote from former president and military strategist Dwight D. Eisenhower: “The plan is useless; but planning is essential.”

I love that quote and use it a lot because it leads to what I call good planning process.

  • The process starts with a simple, lean business plan that covers the main points you need to write down. You can do this with simple bullet point lists and tables. Set down strategy, tactics, major milestones, metrics, and essential projections.
  • Then, as you steer your business with ongoing planning process, take that lean plan and review results regularly. As results uncover insights, revise that plan. Keep it lean, and review and revise it often.

The business conclusion: planning, not plan

My suggestion for business owners: Think about what business plan events are. Separate, in your mind, the business plan required for a specific business plan event from the business planning you can use on a regular basis to run your business better.

Then, once you’ve seen the difference, manage a lean plan that’s always fresh, with regular reviews and revisions. And when you face an actual business plan event, then and only then take your latest version of your lean business plan and dress it up, adding descriptions and summaries, as a formal business plan document.

5 Management Benefits of Lean Business Planning

Lean Business Plan, Planning Process

Don’t think of a business plan as a formal document that’s hard to do, useful only for startups, bank loan applications, and seeking investment. Think of it as lean business planning that’s just lists and tables and is vital for optimizing business management. You plan, run, review, and revise. It’s a process. A constant cycle.

1. Manage strategy

Business ManagementStrategy is focus. Most small businesses have trouble setting and maintaining focus on priorities because there’s always a new crisis interfering, or a new opportunity, real or perceived, distracting them like a shiny new thing.

Not that opportunity is bad. But a lot of the shiny new things that seem like opportunities are just distractions. Pursuing them dilutes the focus and weakens the business. Trying to do everything is too often a quick path to failure.

What to do? Manage strategy with planning. Set strategic priorities thoughtfully and use a simple planning process to manage them. Have a monthly plan review. Take time to reflect on results and assumptions and change and adapt carefully.

That starts with a plan that sets the key points of strategy. Make it a lean plan, just bullet points, extreme summaries. You do it for yourself, not outsiders. So keep it simple. And then add the entire lean planning process for regular review and revision.

2. Align strategy and tactics

It happens so often. You set back to develop strategy, but get back into the routine and don’t follow up with real tactics, real business decisions and activities, to execute strategy. For example, the computer store decides to focus on small business owners who appreciate service, but continues to advertise low prices, doesn’t insist on installing every system, and doesn’t offer good training and frequent upgrade reminders. The tactics don’t match the strategy.

To manage strategic alignment, do a lean business plan that lists tactics in simple bullet points. Tactics include pricing, channels, messaging, product and service mix, and so forth. Make sure the tactics execute the strategy.

Then review tactics and compare plan to actual results every month in a planning review meeting. Check strategic alignment as strategy, tactics, and assumptions change. Expect to revise often.

3. Manage execution

Thing of ongoing business management, and strategy and execution, as a process of taking steps towards goals. Goals include short- and medium-term goals you can call milestones. In your lean plan, you set the milestones you can see for the near future. You list important milestones for the team. You assign dates, deadlines, budgets, performance expectations, and responsibilities.

Then you manage progress towards milestones during the monthly lean plan review meetings. Bring up the milestone schedule, discuss progress, revise as necessary, and manage the ongoing flow from plan to meaningful activities to results. Review and revise as needed.

4. Manage people

People work better when objectives are clear and measurements are specific. People like to control their own performance numbers (also called metrics) so they can see their own progress towards goals and level of performance. Which would you rather have for yourself: an objective numerical goal you can see and share, or the subjective approval and review of your supervisor?

With lean planning, you have the regular review of expectations and results. It’s an easy forum for reviewing performance of team members, revising expectations, and applying both management and, where appropriate, peer pressure. Once a month you review results and compare them to expectations. Sometimes the plan was too ambitious and expectations too high, so you revise the goals. Sometimes the review turns up problems in execution and poor performance.

That’s where management comes in. Make expectations explicit, review results, and make people accountable for performance. All of which is built into a healthy planning process.

5. Manage cash

Cash flow is critical to a healthy business and it’s not always as simple as profits. Businesses that manage products and inventory can be profitable on paper but have all the working capital tied up in inventory. Businesses that sell to other businesses can be profitable on paper but have all their working capital tied up in Accounts Receivable, waiting for their business customers to pay their invoices.

A good lean planning process lays out expectations for money coming in and money going out to manage cash flow. Each money you have a plan vs. actual review to highlight developments, re-allocate spending as the need comes up, and make sure the cash flow is running as expected.

Conclusion: Planning is Management

Forget the myth of the big formal business plan that makes most business owners grateful they don’t have to have one. Instead, think of business planning as a simple lean business plan – bullets and tables for strategy, tactics, milestones, metrics, and essential projections – with a process that includes regular review and revision.

(Note: this post appeared first on the SBA Industry Word blog, as 5 Things Business Owners do Better with Lean Business Planning. This is a slightly modified version.) 

10 Marketing Plan Essentials for 2016

Marketing, Planning Fundamentals,

(Note: I posted this last week on the SBA Industry Word blog as 10 Essentials of A Marketing Plan in 2016.)

10 Marketing Plan EssentialsClearly, technology has changed marketing a lot. We fast forward through ads on television and block them on our devices. We have amplified word of mouth in social media. We pour over analytics and metrics. But what about the marketing plan? Has technology changed marketing planning?

One thing for sure: The fundamentals still apply. As much as ever, marketing is still getting people to know, like, and trust your business. As much as ever, marketing still needs defining target markets, knowing those market segments, reaching the right people with the right message. Pricing is still the most important message, and the lowest price is – as always – not necessarily the best price.

Another thing for sure: the marketing mix, the tactics, are changing rapidly. Goodbye to the yellow pages, hello Facebook. Goodbye public relations, hello social media. Goodbye advertising, hello content marketing.

And where is the marketing plan, in all this? Let me suggest 10 marketing plan essentials for 2016. The fundamentals still apply, but the specifics are changing.

  1. Target Market. The better you define it, the better for the marketing. Experts recommend describing an ideal target customer in detail. Don’t try to please everybody. Instead, please some specific kinds of buyers who have the right set of needs, habits, locations, etc.
  2. Messaging. A summary of the main tag lines, key selling points, value proposition and so forth (we could call this messaging).  There are a lot of different jargon words for this, so be flexible.
  3. Media. Discussion of media, which almost has to be social media and content marketing these days, but used to be advertising budgets, placement, and so on. I’m growing more interested in taking steps beyond just content marketing, to distributed marketing, and real engagement. That means something more than “post and pray.’ As you think about this topic, think about where your potential customers will see your message. What else do you do to help the right people find your message? To track what they say about it?
  4. Pricing. You have to make pricing match product or service, market, or messaging. Don’t assume that the lowest price wins. Pricing is your most important marketing message. Would you buy day-old sushi because it’s cheap? Your price needs to synchronize with your product offering and your target market. If you discount excellence, it becomes less credible in the eyes of your potential customers. And if your strategy is selling an undifferentiated lowest price product or service, make sure that matches the rest of your marketing
  5. Channels. For product businesses you have the classic question of channels of distribution, either direct (usually web and mobile these days) or via distributors and retail, or direct to retail. Information and service businesses need to consider channels too, even though the channels are marketing channels, such as web and mobile. We all need traffic of one sort or another
  6. Promotion. These days promotion might be as simple as consistent presence in the main social media platforms. It might be email marketing, advertising, affiliate sites, public relations, price promotion, and events.
  7. Tasks and major milestones. Every good plan requires some specific tasks and major milestones to make it concrete. Otherwise it’s just theory. You need to be able to track progress against the plan. Milestones help us get things done. We work towards goals.
  8. Important metrics. It takes real numbers to actually work a plan. That might be sales, web traffic or store traffic, leads, presentations, seminars, conversions, tweets, posts, likes, follows, or whatever. Make it measurable.
  9. Review schedule. Keep your plan as short as possible, just lists and tables, because it’s only good for a few weeks before it needs revision. The real world keeps intervening. You need to plan ahead for a monthly meeting to review results and revise that plan.
  10. Budgets. You have to manage the money. A good marketing plan needs to include budgets for expenses, and the sales that result from the different activities.

Some Recent Blog Posts Elsewhere

Blogs and blogging, , , ,

Because you might be interested in these … 

I posted How to project expenses for a new business overnight on the SBA (small business administration) Industry Word blog. It’s a step-by-step how-to piece on exactly what it says in the title. 

Yesterday and today I posted two different posts on James Altucher’s Ultimate Cheat Sheet on Starting a Business, posted on TechCrunch over the weekend. The first was good advice, bad advice, land mines on the path to heaven, on gust.com, yesterday. The second was James Altucher On How and How Not to Look Professional Raising Investment Money on Up and Running. 

Obviously I liked his “cheat sheet” post.

 

 

The Dribbling Metaphor for Business Planning

Business Planning, , ,

Think of basketball or soccer. In both of these popular sports, dribbling is what the players do to move the ball in the right direction. It’s not the point of the game, it doesn’t score baskets or goals, but it’s an important skill, right? I think of dribbling as a great analogy for business planning. And here are some reasons why—and some lessons I suggest we can take from that.

girls basketball dribbling

  1. Dribbling is a means to an end—not the goal. Planning is like that too. It’s about results, running a business—not at all about the plan itself. Good planning is measured by the decisions it causes. It’s about managing, allocating resources and accountability. I’ve written this in several places: “You measure a business plan by the decisions it causes.” And this: “Good business planning is nine parts execution for every one part strategy.” 
  2. Think of the moment when the player gets the ball in the wrong end of the court or field. That’s either a defensive rebound in basketball or a missed shot on goal in soccer. The tall player gets the basketball and gives it to the one who normally dribbles up court. Or the goalie gets the ball and gives it to a defender. At that moment, in a well-coached team: 1) there is a plan in place and 2) the player knows the plan but is completely empowered to change the plan instantly depending on how the play develops. Business planning done right is very much like that. The existence of a plan—take the ball up the side, pass to the center—helps the team know what ought to happen. But changes—the opponents do something unexpected—are also expected. The game plan doesn’t lock the players in to doing the wrong thing or not responding to developments. It helps them make the instant choices, changing the plan correctly…and when they do, the other players can guess the next step better because of the plan. 
  3. Dribbling involves simultaneously looking up, at the field, and developments going on; and down, at the ball, hands, and feet, to manage the details. Proper business planning, in very much the same way, requires looking up at the figurative horizon—¬threats, opportunities, competition, market developments, etc.—and down at the details: tasks, deadlines, budgets, accountability, and of course cash flow and plan vs. actual. 

I’ve always liked this analogy because it dispels the myth that having a plan reduces flexibility to react to developments. Planning isn’t voided by change; on the contrary, having a plan makes reactions easier. There is no virtue in following a plan just because it’s the plan. Proper planning means regular review and revision.

(Note: Yesterday I posted this 3 Ways Business Planning is Like Dribbling a Ball on the Industry Word blog on the SBA community site. I’m reposting it here today)

(image: istockphoto.com) 

Free Online Video Business Planning Tutorial

Business Planning, Starting a Business, , , ,

My apologies if you’ve seen this elsewhere. It is available on the SBA community site, where it was posted about a year ago. I developed it originally as a donation to the SBA effort, because I believe what the SBA to help real-world entrepreneurs get started and run businesses is valuable. I cooperate with the Small Business Development Centers (check out asbdc-us.org) and the Womens Business Centers, and I’m a member of SCORE. I post this here — or repost — so you know about it.

Also, it’s a good example of an embedded Rebelmouse page in a WordPress blog. And another way to do a YouTube Playlist on a WordPress blog. If you don’t know about Rebelmouse, check it out.

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3 Essential Truths About Startups and Investment

Advice, Angel investment, Back to Fundamentals, Starting a Business, , , , ,

Today I’m answering, with this post, a lot of similar questions I get often in email, where somebody is asking me how to get connected to or hooked up with or recommended properly for angel investment. Here are some unpleasant and unpopular facts about startups and investment.

  1. Only friends and family believe in you and invest in you because you’re you. And that’s if your friends and family do believe in you; that’s not true for everybody. Outside investors, in sharp contrast to friends and family, either believe in your business prospects, your market, and your team, or they don’t invest. They’re doing it to make themselves money. (back story: I get a lot of emails from people asking how they can get investment for their business when they have pretty much nothing to offer investors. The answer is: You can’t.)  Or not at all.
  2. About that great idea you have that’s worth $5 billion for which you need $500 million to get started: unless you’re already a startup star, or an oil prince, or family wealth princess, just forget it. Mark Andreesen or Mark Cuban or Paul Allen could maybe get $500 million for a new idea. You can’t. (If it makes you feel better, neither can I). Give it up or scale it down to a $5 million idea that takes $5,000 to get started; or just forget it.
  3. All of you newbies – new to entrepreneurship, no successful startups, no traction — asking how you start your business with no money: Please, get real. Once in a blue moon a foundation or government agency will grant some money, and usually that’s just a low-interest loan, to some proposal that has social and economic value that fits government priorities. We see this in special development zones, some scientific or defense-related research areas, and occasionally with private money committed to social good. But it’s rare. If you aren’t one of those special cases, forget it. And if you are, do your homework, find out what really happens with grants and such.

If you’re still interested in a startup, stop looking for some pie-in-the-sky solution. Get a job in the business area that interests you, and learn the business. Partner up with people who’ve been there already. And do your homework, look up all those web pages full of good advice about startups, including this one, bplans.com, which is full of information about what you can and can’t do. If you’re in the U.S., connect with your local Small Business Development Center, or Women’s Business Center, or Small Business Administration (SBA) office. If not, find the equivalent in your country. Get some real info, and then do the work: do some research, develop a realistic plan, take real steps.

Starting a business isn’t a right. The government doesn’t owe you your startup. You have to make it happen. 

Is Entrepreneurship Contagious?

Starting a Business, , , , ,

Is entrepreneurship contagious? Think about it, and consider this: Obesity is contagious, so is quitting smoking, and so is divorce. Why not entrepreneurship?

Think of how people infect (or so it seems) each other with ideas, fashion, eating habits, and customs. Doing something, even something hard, is easier to do when it feels like a lot of other people are doing it.

And isn’t entrepreneurship a combination of ideas, fashion, customs, and like that? So if I start a business and make it, aren’t my friends more likely to do the same? They have a changed risk perception.

Is there strength in numbers? This is a good argument for Small Business Development Centers, SBA advocacy, Women’s Business Centers,S, and special programs offered by different federal and local agencies. And the local groups, like our own Smartups in Eugene OR, and hundreds like it, that promote startups with pub talks, pitch contests, and mentorship.

These are tough times. Unemployment continues, and general business confidence is way down. Every small startup that makes it helps.

5 Good Posts for Friday July 1

Blogs and blogging, Weblogs, , , , , , , , , , , , ,

I need your help: Can you suggest a way to give a theme and a title to a series of Friday posts listing good posts and recommended links I’ve seen from the last week? My title here is too dull. I’m not nearly good enough at titles.

I don’t want to do this every Friday, but this is the fifth time since April 1, so I’m thinking maybe I should make it a repeated theme, with a cool title. Except I don’t have the title.

  • My absolute favorite this week is Megan Berry’s post on Mashable called 7 Tips for Better Twitter Chats. It’s a very good short piece on the step-by-step details of doing a twitter chat. Megan’s marketing manager at Klout (and yes, one of my daughters).
  • Shashi Bellamkonda of Network Solutions, alias the swami of social media, posted 6 Ways to Improve Your Online Content on the Amex OPEN Forum. Shashi knows. He practices what he preaches.
  • The SBA (U.S. Small Business Administration) has an excellent short piece explaining why you need a business plan on SBA.gov. It’s not a blog post published this week, but SBA.gov tweeted it this week, which caught my attention.
  • Fred Cavazza, Why a Facebook Page is Not Enough forbes.com. I caught this one thanks to Becky McRay mentioning it on twitter.
  • The TED blog posted The 20 most-watched TED Talks (so far). How can you resist this best-of-the-best list from the amazing collection at TED.Com. Trivia question answer: TED stands for technology, education, and design.
  • (Aside: yes, I know, this is the sixth, but I can’t resist) Steve King had some fascinating demographics in his Comparing Small Business Owners and High-Growth Entrepreneurs on Small Biz Labs. 

The Brand New SBA iPhone App is Released

Entrepreneurship, Starting a Business, Web/Tech, ,

I try not to talk about my company or its products too often on this blog, not because I’m not proud of both, but because a little bit of that goes a very long way.

Still, today, I’m proud to post here about the release of the Small Business Administration (SBA) new SBA iPhone app, shown here. It was developed by Palo Alto Software as a donation to the SBA, our way of trying to help small business. SBA Administrator Karen Mills called it…

… another example of the steps we are taking to do a better job of connecting entrepreneurs and small business owners with the tools to help them start or grow their businesses and create jobs.

(You can click on the image to go to the iTunes download page)

The mobile app will help users connect with SBA district office staff and SBA-affiliated counselors and mentors who can provide free, personalized small business assistance. The user-friendly format of the app will help answer questions such as: How do I start a business? Where can I go in my area to get free help with writing a business plan? And where do I begin finding funding for my business?

The SBA mobile app also features a built-in startup cost calculator to help estimate the costs associated with getting a business off the ground, plus an SBA partner locator to help users find SBA offices, Small Business Development Centers, Women’s Business Centers and SCORE.

We’ve been working with the SBA for more than 15 years, through three presidential administrations. One constant there is a lot of people working hard to promote small business through not just the well-known loan programs, but education, information, and a whole lot of problem solving in the front lines. The sba.gov website, with a clean new look introduced less than six months ago, is still the first line of information on small business in this country. And I’m personally very happy to say so.