WHAT MAKES A GOOD BUSINESS PLAN?

By , September 24, 2011 11:55 am

At my former job in a major investment firm, I had the responsibility of developing new business for the firm. In that position I received about 40 business plans a week from entrepreneurs or senior managers of companies seeking financing, and I reviewed about 25 per week. Why didn’t I read all 40 plans? Here’s why.

The opening section of a business plan is the business description probably written in two paragraphs. Here the writer describes his business and product and indicates what his target market is. If after reading the opening paragraphs I do not know what his business is or what he is talking about, I reject it and move on to the next business plan. A writer has to write his business plan in a way that is easily understood and is simply written. If you are an engineer and cannot relate your business in simple terms, then get someone else to write it. There is no excuse.

I also look at the sentence construction, grammar and spelling. If there are spelling mistakes or grammatical errors, it indicates to me that the writer has exhibited a level of care which is not conducive to managing and growing a company. He is neglectful and pays no attention to detail. If you have a shot at having a professional investor look at your plan, then by all means make sure that you have done your research accurately, use proper grammar and your financial information is added correctly.

When I have a business plan to read I look at the presentation. Is it neat and attractively done so that it would make you want to open it up and begin reading it? Does it indicate what the business is and what the product is, how you are going to make money and what your profit will be? Is what you say in the first section of the plan supported by the financial information in the second section of the plan? Are your profit margins comparable with similar companies in your industry?

When you are constructing your business plan, heed the above and you will be sure to interest an investor in reading your plan.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

Mission Statements and the Customer Service Mission

By , August 27, 2011 2:46 pm

Many times in my classes students often confuse a mission statement with the business description. A mission statement communicates to the world what you as a company stands for. You have read some of them, like “We aim to be No. 1”, or to “Give back to Society”. And a business description is one that defines the industry, product and market of the company. So these are completely different in their scope.

But why not have your mission statement focus on the customer and what you might do for them instead of on you? As a customer I don’t care about what the company will do but what it will do for me and others in terms of perceived value. After all, customers are the ones who purchase your products, pay your bills and your salary, and help grow your business from day to day. So, your company would be nowhere without people to buy your products. Treating these people extremely well should be the No. 1 goal of every company. By giving your customers great customer service you will be ahead of the competition. Give great customer service and your customers will keep coming back and they will tell their friends who tell their friends, and so on. You will have the benefit of viral marketing, the best kind of marketing you can have.

But, how do you communicate to your employees and the world what your mission is with regard to customer service? Here are a few tips:

Write down the mission statement of your company and include a customer service component.

1. Make it real. Put in place systems that help, instead of hinder, customer service. Give the employees the tools to make it happen. For example, make a system to make sure that orders are taken accurately; instill in your employees the bottom-line value of giving good customer service. Work should end up being easier because of good customer service.
2. Respect customer service. We need to see that customer service is an honorable profession. Respecting the importance of servicing others – whether it is your suppliers, your co-workers, or the mother buying your baby food online – is key to giving great service.
3. Define what you mean by customer service and then measure the results. Spell it out in clear, definitive terms what you mean by customer service. It is not enough to say “The customer is always right”, what does that really mean?

Here are three steps to great customer service:

a) Figure out what the customers want.
b) Get it for them accurately, politely, and enthusiastically.
c) Go the extra mile for the customer.

After you have defined excellent customer service, measure the results to see if it is working and reward the people who give great service. Keep track of the number of returns, incorrect fulfillment, customer complaints, repeat orders, repeat customers and customer referrals. Watching service performance scores can predict whether you will have problems in the future.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

Getting to the Next Level

By , August 6, 2011 9:43 am

One of the mistakes entrepreneurs make, and there can be many, are that they establish a business for the wrong reasons. One of those reasons is greed.

The entrepreneur will start a business with an investment of his personal savings or money provided by mom and dad, friends and family. Sourcing of money may stop there and the result is that not enough money was raised to viably keep the business going. The entrepreneur bootstraps and scrimps in order to keep his head above water. Why didn’t he raise enough money in the first place to properly run his business?

An entrepreneur may feel that he wants to keep the business all to himself, and doesn’t want any investors involved because his share of the profits or control of the business will be minimized. He wants to keep the equity all to himself with 100% control. I have heard this a lot from entrepreneurs that they do not want to have an investor, loose control of their business and possibly work for someone else.

But let’s think about this. With the entrepreneur’s limited amount of money he is not able to grow the business with any reasonable speed; he is bogged down by the balancing act of getting in revenues and paying bills. He cannot possibly think about growing his business or introducing new products.

With an investment by an angel investor the entrepreneur will be able to grow the business, introduce new products and new customers, and have a mentor within reach to help guide the business to new highs. Angels are the ones who invest in start up businesses. And they are the ones to pursue if you are a pure start-up.

Since an angel investor is interested in how his investment is doing, he will periodically sit down with the entrepreneur for a progress report and offer suggestions for improvement. The terms of the investment will require preferred stock issued to the investor paying an annual interest rate for the use of his money.

The typical investment period for the angel investor is five years, and he may invest up to $1 million. Angels frequently like to invest with other angels. After the investment period he will exit the business by either having the entrepreneur return his principal or seeking other investors in the enterprise.

So you see, having an investor is not a bad thing. He can help your business grow, act as a networking source, introduce you to potential customers, new suppliers, and strategic partners they know well from their own business dealings, and help you take the business to the next level where many beautiful things can happen. Without his help the entrepreneur may not be able to achieve this growth.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

Thoughts on Hiring

By , June 25, 2011 1:45 pm

Recently, I came across an aspiring entrepreneur who told me that his plans for his company would include hiring many of his friends from college. He has trust in these friends and they bring a lot to the table in the way of creativity and business acumen. Besides they would have a great time going to work every day and wouldn’t that provide a great working environment!

My initial reaction was to congratulate him on his plans for his business. Then I told him that hiring your friends is not a good business practice. A business is not a social club where you can continue the fun you had in your college days. By hiring your friends you may not get the critical skills you require for the business, and you will not be able to get the benefit of different skills and points of view of people who come from different backgrounds and education.

A prospective business owner has to consider the business and what it needs to be successful. Considering the kinds of skills one requires of an employee is essential and drafting out a job description with salary range for a position makes good business sense. It offers a tool for planning your organization and the expenditure for human resources that you will have to budget for and cover with your sales efforts.

Of course, you don’t need to be friendly with a new employee. After all, you want him to produce for you. All you need in your business relationships with this new employee is to respect him. You may not like him, but if he is a good employee and provides you with quality work and you respect him, then that’s all you need.

The owners of a start-up company also have to keep in mind their budget constraints. If they cannot afford the people they would like, then they may consider hiring an intern, or someone on a part-time basis. Whatever you do remember: you have money and time invested in your business. Poor employees can hold you back; you want to have employees who can do the job and help you make a success of the business.

 

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

R-E-S-P-E-C-T

By , May 28, 2011 1:36 pm

What do Aretha Franklin, Jackie Robinson and Rodney Dangerfield have in common? They all sought and emphasized the need for “respect”. Respect of others and respect for self.

In the business world and in our everyday lives, how do we attain and command respect? Respect is intangible; it is a feeling; and, it is an earned position. Respect is earned by words and by actions. Things like keeping promises, appointments, providing services, or just doing what you say you will do.

It applies to students, instructors and to employers and employees. Students can gain the respect of the instructor by handing in assignments on time, asking questions in class that are respectful of the instructor’s position, and treating fellow students with kindness and sincerity. Instructors and employers can gain respect by treating students and employees fairly and following through on promises. Employees can be thorough, complete projects when due, and take on responsibilities that are not necessarily theirs. It can also be earned by being personal. How personal are you in your communication? The more personal you are the more respect you will earn?

But there’s a secret to respect. If you master this secret you will be able to create respectful atmospheres in any environment you encounter. The secret is: In order to earn the respect of others, you must first respect yourself. And if you respect yourself that means that you have confidence in yourself. You have to like what you do. You have to be willing to serve. You have to like yourself. And you have to love yourself for what you are, what you believe in, and what or who you seek to become.

The secret is easy. Do the right thing all the time and respect will be yours. Say the right words, take the right actions and believe in your heart that you’re doing the best you can do – for yourself first, and for others second.

Margo Moore teaches BE 261 Starting a Small Business, CEO 001 Setting a Course for Your Business, CEO 002 Knowing Your Market, and CEO 003 Formulating Your Financial Strategy.

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