Archives for March 2006

Come hell or high water, I will unveil my business idea Sunday evening. So, for the time being, I thought I’d take the time to update you on my business plan and the software that I’m using.

As I stated in a previous business plan post, I am using The Ultimate Business Plan Starter software, which is published by ABS Online. By using this software the past couple of days, I think I’ve written more of my business plan than I had in the previous couple of months!

What I enjoy most about the software is the fact that it breaks down the business plan in a step by step manner, going over the aspects of (and providing examples for) the executive summary, company background, products/services, competition, marketing and operating plans, goals and strategies and financial assumptions.

While I was a student at James Madison University, it was a College of Business requirement to take a 12 credit class where we had to work in a group to come up with a comprehensive business plan. My group and I worked on a plan from scratch, using templates and ideas we found in our over priced text books. We got a C+ on the project. I think if we had the foresight to use a product like this, we would have done a lot better.

Granted, just using a good business plan software doesn’t guarantee you’re going to have a good business plan, but I think that it certainly will help you make sure you hit everything.

Remember, a good business plan is essential to have (or in my case, develop) when you are starting a business so you may as well take advantage of anything that will make the whole process easier AND more thorough.

Lately, as I have become more and more discouraged with the progress of our business plan, I have tried to find ways to simplify the process of putting everything together. Today, I think I found my solution.

I’ve downloaded the trial version of the Ultimate Business Plan Starter, published by ABS Online. So far, I have been able to quickly write a draft of our business opportunity, product/service description, current business position, financial potential and company background.

The software has laid out the key points of a business plan in a step by step process, making it easy to get your initial thoughts down and then giving you the opportunity to go back and create a document that flows well.

I believe the trial version of this product allows you to save your plan, however, you are unable to print or convert what you have saved into a Word document. To have those capabilities, you have to buy the full product, which is around $80.

Once I finish the first draft using this software, I’ll make my decision on whether or not I’m going to buy the product, but it’s looking like that’s going to be the plan.

Not much to report tonight.

The business plan is still a work in progress. I think the perfectionist in me it trying to make the first draft the second coming of some great work of literature – an actual title of a great work is escaping me right now. What can I say, it’s been a long week.

Tomorrow I should be able to devote the rest of the entire day to completing the first copy of the business plan, so, at the very least, there is a light at the end of the tunnel.

Part of me is questioning whether or not a business plan is essential in the process of starting a business. Thankfully, I’ve realized that’s probably just the 98% of me that loves to procrastinate talking.

Regardless, the delay on finalizing the business plan is starting to put a bit of a damper on my enthusiasm, so I’m in the process of working through that. Nothing that a few late nights with an IV of caffeine won’t take care of.

On the brighter side, I have found several different organizations that are open to teaming with me once my business is up and running. Not to give away too much yet, but all of these organizations are household names.

On that note, I’m off to grab a quick bite before I get back to work on the business plan. Wish me luck.

This is where my business blog may actually start to be useful to some of you.

Needless to say, choosing your business’ legal structure is one of the first, and most important, things you need to do throughout the business planning process. While it may seem like a daunting task to figure out which direction you should go, it is something that you need to figure out early in the process so you can begin to plan accordingly. In fact, this decision is so important that it may be worth it to consult an attorney or an accountant to help you with the decision.

Anyway, there are several different legal entities you can choose for your business; a sole proprietorship, partnership, a corporation (C-Corp or S-Corp) or a Limited Liability Company (LLC). Here is a great resource from the Small Business Administration that goes over the highlights of each of these different entities. In addition to this great resource, I’ll go ahead and give you the quick and dirty on each one, as well as tell you why my business partner and I decided to go with an LLC for our business.

The first type of business entity is a sole proprietorship. Sole proprietorships are a very common legal entity for small businesses because they are relatively easy and inexpensive to establish, are owned by one person and that one person is typically in control of all of the day to day operations of the business. The sole proprietor receives all of the income (and losses) for the business, and all of the profits are taxed at the sole proprietor’s tax rate. Unfortunately, this type of entity has a very large downside: the sole proprietor has unlimited liability and assumes all of the business’ debts. Both the assets of the business and of the sole proprietor (i.e. their home, personal bank account, etc.) are at risk in a sole proprietorship.

The second type of business entity is a partnership, in which two or more people split ownership of a business. Much like a sole proprietorship, partnerships are relatively cheap and easy to establish, however you may need to consult a lawyer to help draft a partnership agreement. Again, all of the businesses profits are taxed as income for each of the partners, so their individual tax rate will determine the amount of taxes paid. Additionally, since there are more people involved, the liability for the business is spread among at least two people. That being said, the large downside to partnerships is there is still unlimited liability, even though it is spread among the partners, and a partner’s personal assets are still at risk. Also, partnerships may not last forever, as it is possible they can be dissolved in the event of a partner’s withdrawal or death.

The third type of business entity is a standard corporation or a C-Corp. In the eyes of the law, a corporation is its own stand alone entity, meaning two key things: First, it limits the liability of each of its shareholders (owners) and second, it is “double taxed” meaning it is taxed at the corporate level and then the owners are taxed on what they take from the business (more often than not, in the form of a salary). If you chose the route of becoming a corporation, expect a fair amount of time, money and paperwork to get everything set up, but if you choose a field where you risk being sued, that extra protection may be worth it.

The fourth type of business entity is another form of a corporation, but it is called an S-Corp. In an S-Corp the shareholders (owners) of the business are afforded the same protection as a C-Corp, however they have the option to allow the earnings and profits of the business to be taxed at their individual rate, thus avoiding double taxation. However, if the shareholder works for the company, they must pay themselves a fair and reasonable salary for the work they are performing, assuming there is a profit. If the shareholder does not do this, they run the risk of having all of the business’ earnings be reclassified and subject to payroll taxes.

The fifth type of business entity, and the one that my business partner and I ultimately chose, is a Limited Liability Company or an LLC. This relatively new business entity is set up to provide the limited liability of a corporation with the tax structure of a partnership, thus giving you the best of both worlds. While it takes more time, money and paperwork to set up than a general partnership, I believe the extra effort is worth it. An LLC is good to have when you are going to have few investors and the members of the LLC are active in the day to day operations of the business. Here’s a good webpage that goes into more detail regarding an LLC.

We ultimately narrowed our choices down to an S-Corp or an LLC. We ultimately decided to go with the LLC because we wanted the protection of limited liability, the tax structure of a partnership (which both pretty much provide) and we wanted something that was flexible and would be easy to set up and maintain. In an S-Corp, you have to file articles of incorporation with the state, form a board of directors, have an annual shareholders meeting and keep minutes. In general, it seemed a bit more rigid than an LLC and just seemed to be more of a hassle.

Again, as I stated earlier, if you are going to make this decision for your business, make sure that you put a lot of thought into this and, at the very least, consider using the services of a lawyer or an accountant. Hopefully this will give you a good start, but make sure you do plenty of your own research and due diligence.

A couple of days ago I had a post on my business blog regarding the importance of sharing your business idea with others; today I have an interesting addendum.

Last weekend I had a get together at my house and shared my business idea with everyone that was there. All things considered, it went pretty well and I was able to get a bunch of new ideas for my business. Thankfully, I didn’t stop there. That night, I sent out an email to several close friends in the hopes that maybe a few of them would reply and give me some new ideas.

One of the people I sent the email to was the only college professor that I have kept in touch with. I’ve always respected him and I figured he would have some good business ideas for us to work with. Little did I know that I was going to get a lot more than sound business advice.

It turns out that my former professor liked my business idea so much that he wants to help get the business up and running. Needless to say that when I received his email this morning, I could hardly contain my excitement. Somebody else believed in our business enough to want to help us get it started! Now I have a great resource to share my business plan and prototype with.

The most amazing thing about all of this is I WASN’T GOING TO SEND HIM THE EMAIL! I was afraid I was going to be a bother by emailing and asking for his advice. What a mistake it would have been to not email him.

Moral of the story, make sure you are willing to share you business with anyone you think will listen. If they ultimately don’t want to listen, they’ll tell you, but at least give them the opportunity to hear you out.

In the end, you only hurt yourself and your business by keeping your mouth shut.

I’ve given the change of direction in my business idea a couple of days to stew, and I’m still pretty excited about the way things are headed. I’m a pessimist by nature, so being able to stick to a new idea for two consecutive days is a pretty reassuring thing for me, so much so, I’m going to dedicate and entire business blog to it (well, not really, I just wanted to illustrate how excited I am)!

Anyway, since I had already started to dive head first into my business plan for my original idea, I thought it would be best to look for some simple (and hopefully free) software that would allow me to quickly and easily write and change a business plan without having to start from scratch, which is what I’m going to have to do with my current Word document. So, as most people probably should, I started my free and easy search at my local library.

While searching the shelves I came across Complete Business Plan With Software by Bob Adams. Needless to say, since this was exactly what I was looking for, I grabbed the copy and checked it out. Yesterday afternoon I installed the software and spent some time tooling around on it. The program itself is a bit outdated (not that it bothered me that much) but I found the layout and use of the software to be a bit cumbersome and actually made it more difficult to write the business plan. I guess the moral of the story is just because the title is exactly what you’re looking for, doesn’t mean the book will be.

Thankfully, before I left the library I grabbed a copy of Growing Your Business with Google by Dave Taylor. Obviously, our business’ website isn’t up and running yet, but learning about search engine optimization beforehand certainly can’t be a bad thing, not to mention the fact that I’d like to experiment on my business blog site before I start tinkering with my business’ website. Anyway, to be perfectly honest, I haven’t done more than flip through the book, but it looks like it will be a very thorough resource for figuring out how to make sure my webpage is always at the top of the search page. Either way, I’ll keep you posted.

Finally, now that I’ve gotten into this whole business blog thing, I’ve started to see what other people have to offer on their pages. I’ve come across two great business blogs that I’d like to share.

The first one is Small Business CEO, written by Steve Rucinski, and it has a bunch of different articles relating to business, not just small business. One particular article I found interesting was about how businesses are starting to use business blogs as a way to boost sales growth. I thought the article was interesting because at some point down the road I would like to use my business blog as a way to help “drive” people to my business’ web page.

The second business blog may be one of the most useful resources I’ve come across yet. It’s called Entrepreneur’s Journey, written by Yaro Starak, and it is action packed full of useful items. The blog that I found most interesting so far (believe me, I plan on going back and reading more) centered on the top eight search engine optimization techniques. Because I’m such a novice at both blogging and at business, I’m obviously going to be awestruck by a lot of articles out there, however the depth of the content covered in this article blew me away. I have definitely bookmarked this page and will be checking it out on a daily basis.

So, long story short, there really isn’t much progress to report regarding the business. My business partner and I have narrowed down a list of names and are figuring out where we want to go with that. This weekend we are going to start work on a prototype site and continue work on the business plan. While I feel we’ve hit a bit of a rut lately, I’m confident that things will quickly pick up and we will be well on our way to finalizing a successful business.

This weekend I took the advice of a comment left on one of my business blog’s posts and I told a bunch of my friends and family about my business idea. Needless to say, it was one of the best things I have done as I’ve attempted to start my business; not only did I receive great questions and constructive criticism, but I also received several great business ideas that weren’t even on my radar.

I thought (as probably most people who want to start a business do) that you should probably keep things close to the vest, sharing only minor details with those close to you. This weekend I learned that is probably the worst thing you can do, especially in the beginning stages of planning a business. While I’m sure it’s a good idea to follow my Grandma’s advice of, “make sure you don’t give away ALL of your secrets,” it’s probably not a bad idea to share the basic premise of your business, your products, services and features, and why anybody would want to buy this from you.

By being willing to share your business ideas with, at the very least, those close to you, you are doing yourself and your future business a great favor; you’re allowing people outside of your “business team” the opportunity to objectively look at your ideas and processes and offer a new and sometimes better perspective.

For example, today I shared my business idea with over ten relatives and ended up having a conversation that lasted close to two hours. We talked about the basic premise of my business, various features I expect to offer, pricing, who the customers would be, how we plan to market the product – pretty much anything that could have been brought up was!

In the end, I felt like I had solidified my business idea and product/service AND saw that I was missing out on several other markets where I could grow my business and several other businesses. So, instead of staying tight-lipped like I usually am, I opened up, shared my business and ended up with a bunch of great ideas that will make my product/service that much better.

Long story short, sharing your business idea with people that are close to you is probably the best thing you can do in the early stages of putting everything together.

It appears the four and a half hours I spent last night formulating my three sentence mission statement wasn’t spent in vain. The “draft” of the statement has been reviewed and passed the most difficult test known to man – The Girlfriend Test.

When I posted my business blog last night I had what I thought to be a nearly complete mission statement. I had outlined the premise of my business idea, the products and services I plan to offer my customers and had mentioned the virtues and ethics that would set my business apart from any and all competitors. Another 15 or 20 minutes and I would have my final mission statement, right?

Wrong.

When I went to bed last night a little after 1:30 in the morning, I had a statement that hardly resembled the one I started with four hours earlier. After examining nearly every word, its placement, tense and everyone one of its synonyms, I finally was able to come up with a mission statement that made every word count, was radiant, flowed well and properly captured the spirit of my business idea.

So why was it that I was more nervous after finishing my statement than I was before the evening started? Now I finally had to share it with someone. With bated breath, I emailed the mission statement to my girlfriend, knowing that if she was able to find little or no fault with it, presenting the statement to my business partner would be a piece of cake. My girlfriend has always had a way with words (a skill that continues to elude me) so if she thought my statement was good, then it really was good.

Today, around lunch time, I gave her a call, knowing she had ample time to tear my previous night’s work to shreds. When she picked up the phone, I don’t think I even said hello, I just asked, “How was it?”

“It was really good. You used the right words in the right places and it’ll make the readers feel your passion for both your business and for your customers.”

That was all I needed to hear. Tomorrow I’m going to sit down with my business partner, go over the statement and hopefully have something to post along with the back-story behind the business. Then hopefully it will pass the tests of the court of public opinion.

But, for the time being, I’m happy to have passed the toughest test known to man – The Girlfriend Test.

Our mission statement has to be the most intensive thing I’ve worked on so far, and for good reason. The mission statement is the very essence of why you are in business; it captures your business idea and puts your values and practices in print and in full public view for both you and your customers, so it’s probably best to not mess it up. Thankfully, I was able to find several useful resources (both online and in print) that helped to minimize the amount of pain involved in the process of beginning to hammer out the actual statement.

The first book I used was Business Plans for Dummies by Paul Tiffany, PhD and Steven Peterson, PhD, which devoted roughly four pages to why you need a mission statement and how to go about formulating it. The main point this book tries to get across is that your mission statement needs to be to the point and easily understood. Dummies also recommends using the mission statement to capture the essence of your business in 50 words or less, which I think is a rather daunting task. However, they gave a couple examples of well known companies that were able to create quality mission statements with less than 50 words. Because I’m not exactly a wordsmith, I gave myself a bit of latitude and decided to limit myself to four sentences.

The second book I used was The Mission Statement Book by Jeffrey Abrahams, which lists “301 corporate mission statements from America’s top companies.” Thankfully, in looking through this book I was able to see that most companies don’t limit themselves to 50 words and are still able to pull off good statements (that made me feel much better about my sentence limit). This was an interesting resource to see how diverse mission statements are; there really weren’t a lot of similar statements. That being said, after reading 25 different statements, my eyes started to gloss over – 301 statements may be a bit much.

The third and final resource was the one I ultimately used to help me begin to write my mission statement. It came from Entrepreneur.com and gave a very helpful outline to formulate the mission statement, asking 10 questions about the purpose of the business, the customers you expect to serve and why they should use your product or service. The questions really made me reflect on my business ideas and my values and philosophies, which was kind of refreshing and reaffirmed why I’m doing what I’m doing (or at least attempting to do).

So, now I have the basic ideas and wording behind my mission statement, I just need to rearrange some things and change a couple of words to include more radiant and inspired words. And I swear, if I have to spend one more minute looking through the thesaurus for a more personable word for “customer” I think I’m going to just make up a word and hope that it catches on.

I think once I finally have a mission statement that I’m proud of, it will be time to unveil both the statement and the business idea it’s supporting. Hopefully I can get it done tonight, but I’m running out of caffeine. Let’s hope for some divine intervention.