Make Your Business Plan a Living Document
Published November 21, 2011 | 
Common Business Mistakes You Want to Avoid
What Happens Once You Write the Business Plan?
One of the most difficult tasks entrepreneurs and small business owners will ever face is writing a comprehensive plan for their respective businesses. That’s why many never complete the critical planning process, let alone attempt it, and that’s not good. But those that successfully complete the planning development also cultivate the strong realization that their business plan is a valuable reference.
The comprehensive business plan you create is one of the most valuable tools for operating the business you will ever have. Therefore you need to view the plan as a living document, take the time to maintain it, and it will remain an extremely valuable component of the pursuit of the greatest-level of success you set your sights on. The really good news is that once you’ve learned how to write a business plan, keeping it updated should be relatively easy.
Understand that as you continue the operations and growth of your business, it’s practically certain that you will make strategic changes to how you do business, make important decisions on new products or services you may want to offer, and just as importantly, which to discontinue. You might also change market strategies which may include distribution of your products or services, and continue to discover new methods and processes to improve your business operations and how you manage it.
There are important benefits to keeping your business plan current including (1) if you ever need to apply for additional funding through either sources of equity-based private funding, or debt-based lenders and directly related SBA loan programs, the more up-to-date your business information needs to be, and your updated plan should already be available. 
Time is money and because you are ready to submit your updated business plans, you’ll already have saved on both. (2) By maintaining your virtual-living plan, you force yourself to regularly re-examine the document, which in turn helps keep you clearly focused on what’s important to the success of your business.
How Often Should You Update Your Business Plan?
First of all, understand that depending on the nature of your business and the market conditions, you can update your business plan either 
(1) on a schedule, such as once every quarter or every six months, or (2) you can choose to update it on a virtual (real-time) basis, as changes occur.
Keeping plans updated in real-time is a new concept of understanding to many entrepreneurs and small business owners, and may seem like a nuisance, but it’s really the ideal method. Consider that it allows you to quickly act when you need additional funding, or if you need to sell your business, and by turning your plan into a more useful “business road map” it keeps you on top of business at all times. And that’s exactly where you need to be to greatly increase your business’ staying power and chances for success and growth, as your clear focused awareness makes even difficult tasks much easier, with an increase in successful results.
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.
Most Important Business Questions – Pitfalls and Failures?
Published February 17, 2011 | How to Avoid Common Business Pitfalls and Failures?
Most of us are aware of one of the most common pitfalls that cause business failures, undercapitalization. But let’s look at a few other frequently overlooked common pitfalls important for you to be aware of and avoid.
Ill-considered business plans – Okay, it is extremely important to understand that there’s nothing as bad as entering a funding or money meeting unprepared. By “unprepared” I mean if you haven’t taken the time and put the effort into creating a complete or “full-blown” business plan.
If your plan is missing crucial essentials such as a convincing business description, coherent financial projections and a competitive market analysis, then the people you are meeting with, the ones with the cash won’t commit their valuable time to evaluate your proposal.
Focusing too much on the idea and not enough on the management – 
Although you might have the greatest idea since the light bulb, it’s not enough to simply persuade prospective backers and stake-holders that you’ve developed the next must-have gadget or greatest business concept.
You can never, never overlook the critical nature of the need for a team that can successfully execute the specifics of the business plan, generate the level of revenues required to fully repay a bank loan or just as important accomplish an exit strategy for an angel investor or VC. I find that many business neophytes or novices pay no attention to this vital element of the equation. Without question that can destroy their pursuit of funding and approval.
Understand that showing you have engaged a highly-successful salesperson, a skillful marketer, an accountant with startup experience, and other key personnel and professionals who can provide guidance, is essential to finding funding sources.
Failure to achieve the proper legal agreements and documentation – 
This is arguably more important than a prenuptial agreement for a couple with significant individual assets. Legal documents cover everything from agreement terms to time-lines and can avoid serious acrimony or bad blood.
Inadequate cash flow management – Way too many Entrepreneurs and new business owners burn through seed money too quickly, failing to reach positive-cash flow standing in a well-timed manner.
Some contributory factors, such as economic downturns may be beyond control, but you and your executive team are might be unmistakably at fault for others, such as unnecessary spending and overly optimistic forecasts. Financial stakeholders never look kindheartedly at mismanagement of that nature.
No Website – Simply put, if you have a business today, you need a website. Period.
At the very least, every business needs a professional looking and well-designed website that enables users to easily find out important information about their business. Later, additional ways to generate revenue on the website can be added including ad space, drop-shipping products, or recommending affiliate products. Remember, if you don’t have a website, you’ll most likely be losing business to those that do.
Of course, there are many more mistakes and pitfalls to avoid, and understanding how to both identify and prevent them greatly increases your chances of achieving the goals you set for business success.
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.
Financial Plan – Validating Assumptions and Projections
Published January 14, 2011 | 
The Financial Plan must also describe the key assumptions such as, operating margins, penetration rates, headcount, and so on. It is crucial that these assumptions are reasonable. For example, if the business is classified as a networking infrastructure business, and the business plan forecasts 80% operating margins, investors will question the assumption as inflated or exaggerated. This is because investors can quickly retrieve the actual operating margins of similar publicly-traded networking infrastructure firms and discover that not any have operating margins this excessive.
As mentioned previously, while every business is distinctive, each has similarities to other businesses. Assessing and developing financial projections based on those of similar firms will to a great extent validate the practicality and reliability of the financial projections.
Strategic Source and Uses of Funds
The Financial Plan must feature both the sources and uses of funds. The sources of funds for the most part consist of outside investments (e.g., equity-based capital, debt-based capital, etc.) and operating revenues. The Uses of funds may well contain expenses concerned with marketing, staffing, technology development, office space, and so on.
Exit Strategy
All equity investors to a great extent wish for and are highly motivated by an obvious portrait of the business’s exit strategy, or the timing and process through which they can “bank” on their investment. 
This portrayal best comes into focus when the strategic valuation and liquidity drivers of the business are plainly described. An exceptional process to achieve this is through descriptions of equivalent business’s that have had winning liquidity dealings either through acquisition, or merger of public offerings.
The most frequent exit strategies in business plans are Initial Public Offerings or acquisitions. While the specific process of exit is not always critical, the investor frequently desires to see the evaluation to appreciate the team’s driving force and commitment to creating long-term value.