Bootstrap Your Business or Find Outside Funding?
Published November 9, 2011 | 
Questions to Answer Before You Create Your Business Plan
There are times when the nature of the business has a bearing on what type of capital funding you will use and seek. But, you should understand at the beginning that if you don’t have startup experience, a definable and attractive market niche, essential scalability, and a very realistic chance of liquidity in three-to four-years, then outside investment sources including angel investors or venture capital, is probably not in the cards. And let’s face it, as the reality is that some of the bigger ideas just simply can’t, and therefore won’t happen without major capital investment.
For those of you that might not know, to “bootstrap” your business simply means to do it all by yourself, in addition of course to owning it yourself. So typically that also means scaling the business down to a level of activity that’s a manageable focus for you. Quite often people will include debt-based capital or borrowing money in the bootstrap plan for their business, but in the instances that borrowed money is used and has to be repaid, the lenders have no formal ownership in the resulting business, nor do they want any ownership.
Included in the mix of possible capital requirements, there are some businesses that could go either way. An invention that could disrupt a market might be one that could attract angel investment. Of course the entrepreneur could keep it to themselves, with the clear understanding that without an investment, they’d grow the business at a much slow pace, thereby running the risk of having competition knock off their invention and subsequently take over the market. 
In the end, that’s never an easy decision to have to make.
You should clearly understand that just because you can, doesn’t mean you should get investments. More times than not, investors become partners and to a certain extent, bosses. There is just no way for you to have investors and full independence. But on the other hand, you might not be able to build the business without additional resources to what you can gather by yourself. There are significant tradeoffs here also, and it all depends on the variables of who you are, what your business will be, and what it is you want.
Now clearly, if you have a great idea along with the resources including tenacity, knowledge, time, the right skill-set, and can maintain a secondary source of income, you should by all means try to bootstrap your business. Then again, if you are lacking one or more of those attributes, you must then carefully consider angel investors and even possible incubator type organizations that are willing to make an investment in your start-up, even before you get the first paying customer of your business. But understand there might be a price to pay in the form of a substantial cut of your business.
Nevertheless, the good news is that either choice you eventually decide on, the fundamental principles of starting a business are the same no matter which direction you decide to take.
- It always starts with a good idea, but make sure it’s one that’s easy to understand and explain, and actually solves a real problem in the market.
- You need to determine and completely understand your target market niche, and then validate your idea. It’s important to do these essential tasks before you invest a lot of time and money into the idea.
- A well thought-out clear and concise business plan is vital to provide you with the roadmap to your business success.
Do You Plan to do the Business Yourself or Build a Team?
Published November 8, 2011 | Questions to Answer Before You Create Your Business Plan
I must admit that this decision has a lot to do with the personal style of the entrepreneur, along with tendency and preference. There are certainly some people that will naturally want to operate the business themselves, own it exclusively, decide all the key decisions, and in the end, win or lose by themselves. On the opposite end of the business spectrum, there are others that can’t imagine not being part of a team they put together, including founders to talk to, and team members with different skill and experience sets. The question for you is, “Which of these two types do you identify with?”
Of course, we can’t forget the fact that the type of business plays a role. When you think about it, there is no way you’re going to start a large manufacturing business by yourself, and you’re definitely not going to build a sizable team to start teaching individuals to speak a foreign language. But, as with everything else, there exists so many exceptions to any general rule, I think it all still comes down to how you, the original founder actually feel about it.
A one person business operation could easily decide to focus on what they can do by themselves, and maintain full control, even though it means a slower rate of growth for the business. On the other hand, their idea might be much more inviting, and likely to secure angel investment and be able to grow faster if they had two or three additional team members with extensive experience and distinct, yet complementary skills.
Building Your Management Team
Having a team is a decision one has to determine for themselves, before they start the process of developing a more detailed business plan. A significant decision because having founders in a team, or not, changes the very essence and nature of a business very fast.
In the early days of operating your own business, it’s only natural to attempt to achieve as many tasks as possible by yourself. It’s obviously the most cost-effective, sensible and easy way to do things in the very beginning. But then, your enterprising business starts to grow, and you find yourself being pulled and stretched thinner and thinner all the time. Until Sooner or later, you discover that you can’t possibly continue to oversee business operations, sales, and don’t forget accounting and fulfillment and marketing, and remain hopeful that you can continue to grow your business.
Clearly understand that when you reach this point, you have to begin consideration of bringing other high-level managers on board to give you the help you need. 
Keep in mind when building a team that you should build an experienced team with the ability to manage all the essential and vital areas of the business in order to take it to the next level of growth.
While you are building your team, understand the process demands that you match the jobs to people’s strengths for greatest success. That means you have to give people responsibilities according to their skill and experience level, and whatever you do, don’t base it on how close a friend they are, or how close a relative they are to you, or even whether you just like their sunny personality. Also, understand that includes you as well. So don’t give yourself an impressive title and job unless you’re absolutely the right person for the job. The reality of the situation is many sharp entrepreneurs wind up hiring their own boss when they realize their skills lie elsewhere in the company, and greatest success is the bottom line.
What Does Success Really Look Like?
Published November 7, 2011 | Questions to Answer Before You Create Your Business Plan
I was at a local retailer recently, and I had a beginning-level conversation with a woman who was right at the initial stages of planning for the business she was going to start. As we talked, she seemed to have a good understanding that there are several questions she needed to determine the answers to, but was struggling with fundamental, yet vital questions she had to answer before moving on to the remainder of planning for her business. I explained she needed to strongly-consider and answer a few critical questions before going deeper into the planning process.
One of the most overlooked, yet vital questions that goes to the heart of any entrepreneur’s aspiration of business success is, “What does success really look like?” This turns out to be by far, the most essential question that almost nobody asks themselves. I think most of us naturally tend to take for granted that success in business is precisely measured in growth and profits only, or, at the very least, how much money is in the bank. But, quite the opposite to that typical assumption, if you observe closely the businesses you deal with, I bet you’ll notice people who care about many other dynamic things, in addition to just their business growth, profits and cash.
One of the most important reasons that people struggle with becoming successful is simply because they don’t have a clear vision of exactly what goals and objectives they want to accomplish. Rather than a well defined vision, they have extremely vague ideas of what it is they would like to achieve, and they’re deficient of a solid strategy for getting there.
This kind of scenario almost always leads to sporadic jumping from one idea to another, but never being able to commit to any of the ideas. Essentially, when results don’t come quickly, many of these type people find it easy for them to lose interest and frequently move on to other elusive ideas that might bring faster success with less effort, but rarely do.
In most of these type cases, the problem is rarely that success has proven unattainable, as most of the time the problem has to do with the would-be entrepreneur’s clarity of vision and understanding. 
Either they don’t simply have a clear enough vision of exactly what it is they want to accomplish, or they don’t have practical and feasible strategies for turning the vision into a successful reality.
Understand that a clear vision is essentially critical to success. If you can’t visualize, and don’t know exactly where you want to go, how can you possibly design a good plan with strategies for getting there? The reliability of the strategies is always directly related to the clarity of the visualization! So the initial step toward your success is always to identify precisely what it is you want to eventually accomplish. This isn’t just about your financial or career success, but these extremely valuable principles apply to your ultimate success in any endeavor you choose in life.
Plans Are Useless, but Planning is Indispensable
Published November 3, 2011 | 
I was recently reminded by a friend and successful small business owner, that General Dwight D. Eisenhower, who was also President of the United States, was quoted as saying, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”
It’s all too often that companies are in search of magic silver bullets. They leap from the latest trend-to-trend and solution-to-solution trying to find elusive easy answers. Growing success and associated staying power just doesn’t work like that. Developing a business is hard work, and planning is an indispensable step in the process. As the great Yogi Bera once said, “If you don’t know where you are going, you will wind up somewhere else.” And “somewhere else” is definitely where you don’t want to be!
Planning is a key component of every business, from developing strategic plans for the start of the business, to annual reviews for tactical adjustments. The purpose of these actions is not to write the most sophisticated strategic plan. The purpose is to refine your strategies, question all the market variables, set and reset your priorities and get geared up to execute.
It all boils down to execution
Finding the correct strategies is simply not enough. Success depends on how effectively the strategies are executed.
Understand that plans are just plans until you put them into action. Your success is directly linked to how well you can execute your strategy.
Planning purely supports execution. When you plan on a regular basis it builds buy-in from your team, but even more significantly it provides accountability. No one wants to show up to a planning and review meeting and admit they dropped the ball and didn’t do what was expected. That of course is unacceptable, since lack of execution as planned lets everyone down.
Effective planning provides the structure and clearly defined expectations required to successfully execute. It places everyone on the same page, describes and delineates what actions need to be accomplished, why the actions are essential, and exactly who is responsible for what.
Don’t get caught up in the jargon
You should clearly understand not to get carried away with development and planning, which can easily get you mired in unnecessarily sophisticated MBA jargon. Don’t! Planning doesn’t have to be that complicated. When you aren’t looking for your magic silver bullets, it’s much easier to focus on the definition and implementation of your vision. Let’s examine three simple questions to help discuss your mission statement, goals and strategies:
- Why start the business in the first place? (This is your mission statement)
- What do you want to realistically achieve in three years? (These are your goals)
- How are you going to accomplish everything? (This is your strategy)
Of course, these questions may seem simplified to some. But for me, they are great. I hate carefully worded mission statements that sound wonderful, but in reality don’t say anything. Take my word, they’re completely useless. Clearly understand that you should get beyond terminology, and develop clear concise strategies that you can execute. And always remember, as General Eisenhower said, “plans are useless, but planning is indispensable.”
Business Plan – Appendix
Published January 17, 2011 | 
The Appendix is used to substantiate the balance of the business plan. Every business plan should have a full set of financial projections, and many times they are placed in the Appendix, with the summation of these financials in the Executive Summary and the Financial Plan.
Other documentation that may possibly appear in the Appendix includes (1) Technology: Technical drawings, patent information, etc. (2) Partnership and/or Customer Letters: Letters from partners and/or customers stating their interest in working with the company can add huge credibility and confirmation (3) Extended Competitor Evaluations: It’s a common fact that the majority of businesses have more than a few direct and/or indirect competitors. 
While the Competitive Analysis segment of the plan evaluates the most direct competitors, addition of a more comprehensive list and narrative in the Appendix demonstrates that management accurately recognizes and comprehends the players in the marketplace. (4) Customer Lists: Together with a list of strategic customers that the company is serving, in addition to their rank and/or type or quantity of product/service being offered.
Other Possible Components of a Comprehensive Appendix
Here are some examples of what else might be found in this section:
- Tax returns of principals for the last three years, if the plan is for new business
- A personal financial statement, which should include life insurance and endowment policies, if applicable
- A copy of the proposed lease or purchase agreement for building space — or zoning information for in-home businesses — with layouts, maps, and blueprints
- A copy of licenses and other legal documents including partnership, association, or shareholders’ agreements and copyrights, trademarks, and patents applications
- A copy of résumés of all principals in a consistent format, if possible
- Copies of letters of intent from suppliers, contracts, orders, and miscellaneous letters of intent
In the case of a franchised business, a copy of the franchise contract and all supporting documents provided by the franchisor- Newspaper clippings that support the business or the owner, including something about you, your achievements, business idea, or region
- Promotional literature for your company or your competitors
- Product brochures of your company or competitors, or photographs of your product
- Market research to support the marketing section of the plan
- Trade and industry publications when they support your intentions
- Quotations or pro-forma invoices for capital items to be purchased, including a list of fixed assets, company vehicles, and proposed renovations
- References
- All insurance policies in place, both business and personal
You do not have an obligation to work each or any of these items into your business plan. Understand that not all plans have need of this exhaustive a level of documentation. Bear in mind this list is a starting place for items and information that you may well want to incorporate in your business plan.
Once again, the appendix performs a supporting function. It does not present new materials, and it does not function as a filler section. It ought to further convey your business idea in a highly proficient manner.