Archive for July, 2009
Small Business Marketing Plans
Every major market can be described as segmented into a number of parts. They can be based on the various characteristics of the customers, such as age, sex and education. They can also be based on the geographical and other characteristics of the markets. The common methods of market segmentation are geographic segmentation, demographic segmentation, psychographic segmentation, buyer behavior segmentation, and volume segmentation.
Segmentation based on region, continent, country and climate of the area comes under geographic segmentation. Segmentation based on age of the customer group, sex, family size, language, income level comes under demographic segmentation. Variables such as personality types, lifestyles and value systems form the basis of psychographic segmentation. Buyer behavior segmentation is similar to but slightly different from psychographic segmentation. The primary idea in buyer behavior segmentation is that different customer groups expect different benefits from the same product and as such their motivations in owning it and their behavior in buying it will be different. In volume segmentation, the quantity of purchase or the potential quantity of purchase is the base for segmentation. There may be bulk buyers and small-scale buyers, regular buyers and one-time buyers. They have to be treated differently.
Whatever be the parameters/ bases of segmentation, the segmentation task is an exacting one. Mere identification of a difference between one customer group and another does not complete market segmentation. In fact, the identification of differences is just the starting point of the whole process. Many other steps have to be carried out for completing the exercise.
It involves assessing the difference between one customer group and the other in terms of their needs and their likely responses to the product and other marketing inputs of the firm. Find out by what descriptive characteristics can consumers of a particular disposition is tagged on to a specified segment. Analyze and establish whether it is desirable and possible to formulate separate marketing programs and marketing mixes for the different segments.
Author: Max Bellamy
Small Business Internet Marketing
Local or regional specifics also have to be taken into consideration for the design of the marketing plan to target new business customers.
Tags: business plan financial, business plan financials, financial business plans, sample business plan financials
Business Financial Success
Business Financial Success Comes With Proper Planning
Unless you happen to be planning to establish a charitable, non-profit organization of some type, the main reason why you may be interested in starting a business is to make a living or build wealth from the endeavor. For many people, the desire to “be your own boss” and escape from the shackles of traditional employment is part of the motivation, but the bottom line usually comes down to wanting some form of business financial success so that you are not living from paycheck to paycheck.
One of the most important things that you will do in your quest to enjoy business related financial success is to have a clear, detailed, and realistic business plan that will lay out a map for your progress in your new business. A well-done business plan will include financial projections, working capital management objectives, cash flows analysis, industry and competition analysis, a profile to target customers or a specific audience, and an outline of organizational and asset management ideas.
One of the common errors that a lot of new business people make, which contributes greatly to the high failure rate of new businesses, is not having a clear and complete picture of the marketplace in which they plan to compete. Spending some advance time in analyzing the industry and collecting enough pertinent information will give the entrepreneur a much better idea of what is needed in order to forge business financial success in a given field.
In most cases, when someone is looking to start a new business, they will need some type of start up, working capital to see them through until the business starts to make enough money to be self-sustaining, as well as to be able to pay out salaries. Because a new business has no track record of any kind and no net assets or financial statements to submit for a loan, the only business financial information that the lenders will be able to evaluate is the entrepreneur’s personal credit and total assets.
Even if you have excellent credit and current assets that you can borrow against in order to take out a loan to get your business started, a loan officer will still require a detailed business plan from you. Without a thorough business plan, your aspirations are nothing more than wishful thinking and your loan application won’t get very far in the process.
The lenders will want you to prove to them that you have a knowledgeable understanding of the industry you wish to enter, as well as sufficient management knowledge to be able to successfully take your business from inception, through the growth phases and into stability.
When an entrepreneur is heavily engaged in establishing and growing their own business, there is no doubt that it becomes a very personal endeavor. But often this perspective is just “too close” to be able to make important decisions that can lead to business financial success. However, when someone has taken the time to research and map out a clear and detailed business plan, this can help to overcome the challenges.
Author: Mike Selvon
Enrich your knowledge further by reading more great business financial articles from Mike Selvon portal. We appreciate your feedback at our financial planning blog where a free gift awaits you.
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Tags: Business Financial Plan, Business Financial Success, business plan
Financial Projections in Business Plans
One of the most difficult sections to write in a business plan is the proforma and financial sections. After all it is most difficult to what exact costs you will incur or what level of sales volumes are actually achievable. So often businesses are faced with excess government controls at all levels which take thousands of dollars in fees, additionally legal fees, delays and lawsuits often ensue and slow the project. You cannot know in advance what roadblocks or brick walls city planners, country agencies or Federal Regulators will come up with, as they often change their minds and add new laws in the middle of your already delayed project. These are only a few of the problems facing entrepreneurs when writing financial projections. Other issues occur from an over enthusiastic entrepreneurial positive attitude and business plan writers should double the money needed and triple the time to complete the project to be on a reality based plain. Thus if you beat your projections everyone is happy. Including bankers, investors and yourself. If folks are not happy you may find yourself in court defending yourself and making excuses, many of which many not be your fault, but in the end you are hung out to dry as the buck stops with you.
To assist you in writing your financial projections section of your business plan, I have prepared a sample. This sample is from a most simple business model; a mobile car wash, which is part of a franchise system. Please feel free to print this article out and make notes in the margins and then take a legal pad and sketch out your own financial projections and start-up capital needed. I sincerely hope this sample helps you.
- – - – - – - – - – - – - – - -
Financial Projections
We will follow our business plan to keep us in a profitable situation at all times. We will try to keep our car wash truck busy at all times. We will stay on top of collections and make sure all invoices go out on time and are directed to the person who authorizes payment. We will treat cash flow as a primary objective in order to reach our financial projections. We will be sure to have the right mix of services.
Gross Revenue Percentage Breakdown
Personal Car Washing 60%
Graffiti, Industrial, Concrete 20%
Fleet Washing 15%
Other 5%
Gross Revenue:
Insert Graph or Pie Chart Here.
* Note: Car washing of personal vehicles will be 60% of our business. Over 80% of these monies will be collected at the point of sale by either:
Cash
Check
Credit Card
Some will actually be paid in advance on credit cards thus keeping us on the proper course to achieve positive cash flow at all times. Very few customers will be allowed to be billed monthly.
** Note: Fleet washing and industrial (graffiti, concrete, etc.) will only account for 35% of gross receipts. Twenty-five percent of this will be collected at the time the work is done, leaving only 26.25% of gross receipts to be billed at month’s end.
Billing
On fleet accounts, all invoices will be net due in fifteen days. After fifteen days they will be considered late and 2% will be charged. If, in the future, our mix of percentages of services performed changes, we may offer a 2% discount for payment in ten days and a 1% discount for payment between ten and fifteen days. We don’t anticipate changing our mix. However, if our city awards us a graffiti contract for $75,000 a year we will definitely accept it.
Anticipated Gross Sales From Services
In the appendix there is a first year pro forma of projected sales. We believe these figures are attainable. For various reasons we will take a 70% scenario for budgeting purposes in case everything doesn’t go as planned. Just to be on the safe side. We project a conservative gross sales dollar amount to be:
$124,630 Projected Gross Revenue X .70 70% Of Projected Dollars = $ 87,241 A Conservative Safe Number To Project As First Year Gross Receipts
Anticipated Business Expenses
We project costs of $56,112 for our first year of expenses. Please see spreadsheet in the appendix. We will add in a 20% fudge factor just in case we have any unanticipated expenses in year one. We project a conservative business expense dollar amount to be:
$56,112 Anticipated Expenses X .20 20% Fudge Factor = $11,222 Possible Additional And Unanticipated Expenses During Year One
$56,111 Anticipated Expenses თ,111 Unanticipated Expenses = $67,334 Total Anticipated And Unanticipated Business Expenses For Year One.
Profit Per Truck
Please see the graph on the following page of the ‘Net Profit One Truck’. This graph is based on the spreadsheets ‘Anticipated Gross Sales From Services’ minus ‘Anticipated Business Expenses’.
We realize that if a conservative approach is taken, we must use the 70% scenario for Gross Sales and add 20% to Business Expenses. We project a conservative net profit for the first truck in year one to be:
$ 87,241 Gross Receipts – 67,334 Expenses = $ 19,907 First Year Profit. $ 19,907 First Year Profit divided by 12 Number Of Months = $ 1,659 Per Month Profit, A Good Conservative Number.
Author: Lance Winslow
Tags: Business Plans, financial business plans, Financial Projections in Business Plans
A Business Marketing Plan
New business starts from humble beginnings. Let’s look at the mega successful Disney. Who would have thought two brothers could have launched an entertainment empire. The main reason that Disney has done so well in the past and now is innovation and a good marketing plan. This marketing plan can be followed by small or large companies, and new business or established ones.
I have been in Disney World several times and the first thing I noticed is product exposure. When I walked through the airport there are many Disney signs and a Disney store. Disney buses also display their name. The Disney name is very prominent.
Advertising is very costly for brick and mortar businesses. This is not so for internet businesses. You can advertise for little or no cost at all on the web. Here are five ways to do it.
1. Submit your site to directories
2. Sign up for Face Book and tell people about your product
3. Make an advertising lens on Squidoo
4. Actively seek businesses to link to your site.
5. Put your site on social book marking sites
The next part of Disney’s marketing plan is research. Disney does this by strategically placed people with questionnaires throughout the Disney complex. The questions are focused on customer satisfaction and suggestions on how to improve their experience. This data is very important to Disney. The data gives them a guide line as to how to improve and create a product for their customers. Getting feedback from your customer is much easier to do on the web. There are two main ways to get this information.
1. Go to online forums that deal with your product or service. There you can get information on what is important to a customer.
2. Special interest chat rooms can also give you a prospective on what you need to do to gain a customer.
If you follow these main marketing ideas, it will help you to increase sales.
Author: Bonnie M Feltz
How to Develop a Marketing Strategy
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Tags: A Business Marketing Plan, Business Marketing Plan, Marketing Plan
Small Business Marketing
If you are an owner of a small business and do not have a marketing plan, you are destined to fail. And I’m not necessarily talking about a business plan with all the financials and stuff. Those are important too, but if you choose not to have a concrete plan for your marketing, all you’re going to accomplish is to become one of the 90% of small business failure stories.
Planning is integral. You won’t even go to the supermarket without some sort of plan. How do you expect to run a successful business without one? As you read through every one of these tips you’ll realize that your small business marketing success depends on having a great marketing plan. 5 crucial elements of a small business marketing plan are as follows:
1) Vision -It’s important that you create a vision statement for your small business. Something that can always be there to let you know what it is your business is all about and where you want to go. Here’s an example from Microsoft: “a personal computer in every home running Microsoft software.”
2) Your Clients – Your small business marketing plan should also include who your ideal clients are. Those people you want to open their wallets and give you their money. If you can determine the age, gender, income, habits, likes and dislikes of your ideal client you’ll be far ahead of the game when it comes time to strategize.
3) Competition – Just as it’s important to figure out who you’re selling to, it’s also important to figure out who is already selling to them. Once you narrow down who your competition is, you can determine what they do that works and what they do that doesn’t and craft your own campaigns accordingly.
4) Goals – Just like you’ve gotta have vision, you also gotta have goals. Set a reachable one year goal and this will help you in deciding which actions to take along the way. Your goal can be financial, or in terms of customers or market share, or all of the above. Just be sure to make it lofty enough for a challenge, but realistic enough to stay focused.
5) The Strategy – Once you’ve figured out all of the above elements, it’s time for the strategies themselves. What marketing actions are you going to take over the coming year that will enable you to reach your goals? Will you be doing radio spots? Print ads? Web marketing? A combination of the three? There are countless tactics you can use. If you can’t decide which way to go you can always hire an agency to help you out. They aren’t always as expensive as you think.
If you can follow these 5 crucial elements of a small business marketing plan you’ll be well on your way to small business success.
Author: Cara McCarron
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Tags: Business Marketing, Business Marketing Plan, Small Business Marketing
FREE Online Marketing Plan
New marketers need not worry about spending any money. Learn these FREE marketing techniques first. Then you can start maximizing each method accordingly.
You Get What You Pay For?
That term is usually true , no matter what is being bought. But for marketing, sometimes its more about the time spent, and not the money. Our time and energy is very important when laying the foundation of an online business. (Also true if you are using online marketing for a brick and mortar business, which will be much more frequent in the months to come)
So forget about the spending your hard earned mulah, and concentrate on the more important aspects of your business or product.
1. How are you helping others.
2. What can you offer that others dont.
3. What is your targeted audience.
4. Whats the best way to create long term revenue.
5. Definitely Think about creating a little Report that you can giveaway free.
Get these steps out of the way and you will be ready to promote your product or service.
FREE Marketing Plan
Here is the basic plan:
Place Your Website Link In front Of Viewers. —-> Offer them a FREE product for signing up with your ‘newsletter’.——-> Send them to Unique Sign Up pages so you can monitor which traffic techniques bring the most traffic, and so you can tweak each option accordingly.——-> Create the Emails in your autoresponder that will give them advice , help , and more FREE products —–> Send 5-7 Of these helpful Emails, spreading links throughout , that lead to your main product ———> Then after you have built trust, you focus on selling the Main Product ——-> Constantly tweak your FREE traffic options, and consider spending money accordingly – after you know what techniques can be optimized.
Tons Of FREE Marketing Tools
Using the many FREE marketing options is not just about throwing your ad’s and link’s out into the internet world and seeing what sticks. Many times it might seem like nothing is sticking, but that is because it takes time and practice.
It takes TIME and not MONEY.
The plan is quite simple , its about putting the product in front of prospective buyers and leading them through a sales funnel. So how can we put our product, or websites in front of these people?
There are many different traffic options that you can use, and you should definitely think about using them all. Here is a list of the most common ones:
1. Articles -Obviously , I like these.
2. FREE Classifieds
3. Using Forums
4. Traffic Exchange
5. Social Marketing
6. Answer Sites
All these are great ways to offer people the opportunity to check out your site. And they are also good for creating back links for your SEO. Remember, when using these sites it is critical that you make the most of all the linking options.
Part 1 Of The FREE Online Marketing Plan
Using each of these FREE traffic options can be different in the type of viewers you get and what you should with each of them.
What you need to do is offer people the FREE report that you created. And that involves using a squeeze page. What you are doing is trying to show them that you are an expert in your field. Its not about trying to make a sale right away. That rarely works. So you will find that funneling is the absolute best way to make sales.
Take time out of each day to use each of these FREE methods, try to create a tracking system that will tell you which traffic systems are working the best. I usually create different landing pages for each traffic option. When the person clicks through and signs up for the free report, they are listed in there own unique autoresponder. Thus I can tell which traffic system is pulling in the most prospects. I have a link to all the free tools you will need, as well as 5 FREE autoresponders.
So you send your visitors to the squeeze page and now you have there email address. This is when you show them that you are willing to share your expert advice with them. So what you want to do is set up your autoreponders with around 5 email messages ,all of them about 2-3 days apart. In these emails you should focus on giving helpful tips and advice. Oh yeah, you should definitely think about providing FREE information and products. You can find this stuff easily.
In these emails its O.K. to create a link to your product after your signature, just to give them the opportunity to but. But after you have sent out the helpful emails, thats is when you can offer your product to them. See, you have been educating them on the whatever topic your product deals with. See, you have been using these emails to ‘presell’ them.
Its a known fact that people usually do not buy something until they have seen it atleast 5-7 times.
Why will they buy from you?
Because they TRUST YOU! You have been proving yourself as an information provider, someone who really wants to help. (Make sure that really do try to help people. They can see through the fake stuff)
Now you what is great about this system?
1.If you make the sale, you still have many opportunities to make more sales.
2. If you dont make the sale, you still have tons more opportunities to sell them something else.
That is the real power of funneling. Now I wish I could explain how to get maximum traffic out of all the FREE traffic methods, but that would take quite awhile. But I can help you with some FREE tools and software that will totally increase the power of your online marketing. Just click the lick above, and good luck!
By Joshua Mintz
Published: 2/21/2009
Grabbing People With Online Marketing Strategies
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Tags: FREE Online Marketing Plan, Starting An Online Business
Writing A Business Plan
Writing A Business Plan What Makes A Good One
Writing a business plan can be a lot of hard work or it can be great fun. An effective plan can help your company to greatness. A poor one can lead you out of business. No plan is like asking to fail before you even start.
Not every business needs a 200 page bound business plan. However every business needs to have some idea of where they want to go and how they are going to get there. This article covers some key insights into writing a business plan that get your business to where you want to be.
The first stage of any plan is ANALYSIS. You need to take a very objective look at a number of factors that may impact your business. There are many factors to consider but the two major ones are competition and your operating environment.
Let’s look first at competition. Every business has competition, even if you think your product or service is unique. How is this? Well it’s quite simple really, people have choices to make. The most fundamental choice they make in most cases is whether to buy what you offer or but something else. For example I could buy a game console or I could buy groceries instead. Customers only have so much money available so you first task is to ask yourself what is my competition like and can I beat them? The more you understand your competition the more you can develop your business strategy of being different and outperforming them.
Now let’s look at operating environment. This is understanding what factors around your area of operation are likely to affect your business performance. For some companies this includes looking around the World in other cases it’s just your local neighbourhood. You need to ask questions such as:
How is the economy going?
What is consumer confidence like?
Where is technology heading in my industry?
After answering all the questions you need to decide how these might negatively or positively influence your performance.
Now you know more about your competition and operating environment it’s time to set some OBJECTIVES. This is what you want to achieve in the period your business plan covers. It is said that good objectives are SMART. That is specific, measurable, achievable, realistic and targeted. Here’s an example of a SMART objective for a hypothetical business.
‘By the end of this year we will have increased sales of product X by 7.5% over the previous year.’
You can see how clear this objective is. It is much easier to achieve high performance with clear objectives.
Now you need to outline your STRATEGY. How are you going to reach you objective(s)? This is where your marketing plan often comes in as it helps describe the programs you will run to achieve your desired objective(s). To continue the example above our strategy may be to gain distribution for our product in one new major retail chain.
To make your strategy work you must then allocate appropriate RESOURCES. Certain things will need to be provided to reach your goal. This could be dollars, people, equipment, etc. Your plan must have included the resources you are allocating and why you believe this is adequate to get the result.
Every business plans also has some PROJECTIONS. This is your basic financials that you plan will deliver. Are you expecting a profit or loss? How much?
Lastly you need to allow for CONTINGENCIES. Things change all the time and your plan needs to consider these possibilities in advance. A good way to do this is to ask What if?
What if a new competitor enters our market?
What if a distributor delists our product?
What if interest rates rise?
Your analysis should give you some idea of likely contingencies. It saves a lot of stress if you have some documented ideas for dealing with them before they become a big problem.
Writing a business plan is never perfect, the plan is on paper and you’re operating in the real world. However a good plan can really guide you in the right direction. Take time to put real thought into preparing your plan an above all make sure you USE YOUR PLAN!
By: William Siebler
Please visit our site for more information on Writing a Business Plan
Article Source: http://EzineArticles.com/?expert=William_Siebler
One Mann’s Opinion: Setting Up Your Strategic Plan
Setting Up Your Strategic Plan. Teamwork is so important that it is virtually impossible for you to reach the heights of your capabilities or make the money that you want without becoming very good at it. Brian Tracy Yesterday, I mentioned the dreaded business … to grow your business, you need to understand your customers and potential customers. What makes people do what they do? What makes one message resonate while another fails to cut through?
Interview: Part II: Barry Diller: ‘The Business Model For Content …
The ‘lack of a business model’ was nuts. Business model, in this case, makes no sense. There are only a couple of ways to pay for content. Either advertisers or you can charge in macro or micro subscription payments. Within that, we do think we are … I don’t know,” he’s saying one of two things: 1) He has no business plan and this is a vanity project, or 2) he has a business plan, but thinks he can intimidate this journalist…
Marketing Plan For Small Business – One Page Marketing Plan …
Do you have a Marketing Plan for your business? Less than 5% of the Small Business owners I talk to have a Marketing Plan and if they do take the time write one. … What you need is a simple, easy and practical Marketing Plan which is why I create the One Page Marketing Plan. Good news is I am practically giving it away. Grab your copy of the One Page Marketing Plan here.
PlanMagic Business Blog » 20 ways to stretch your marketing budget
Encourage them to spread the good word about your company. One finance company discovered that their cleaning lady’s husband had a passion for large motor cruisers. So she frequently went to shows and the like with him. … Our product line of business plan, financial plan, marketing plan and media plan software enables you to plan better and faster. We continue to set the standards in business plan automation, business plan…
Writing a Creative Brief : Bizzia – Business News and Commentary …
Writing a creative brief can help you plan your advertising by helping you to focus and providing a good basis for your ad (or other collateral). It should provide your basic purpose for the ad, list some supporting information, … that you’ll go through a few of these before you hit the right one. But don’t be afraid to write something down so you have a goal in mind when you create your ad. It’ll keep you from trying to do too many things in one …
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Tags: a good business plan, business plan, business plan forms, how to prepare a business plan, Online Business Plans
How to Write a Business Plan for Online Marketing and Promotion
Online marketing and promotion can be a great success if proper
planning is done in advance to ensure the effectiveness of your
online marketing and promotion activities. Without planning,
online marketing and promotion can be an enormous waste of both
time and money. Business plans and marketing plans are crucial
for the effective operation and ultimate prosperity of any
business. Read the rest of this entry »
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Your Business Plan
You have a great idea for a new product or service, or perhaps you’ve been running a business out of your home. You are ready to take the next step by seeking investors or expanding or incorporating. Before you can begin, you need a business plan.
A business plan is a road map. It is not an ironclad contract. A good business plan will give you a framework for success as you move ahead, and will also provide documentation for third parties including lenders and investors. A business plan shows where you want to be in one year, two years, five years. It is a place where you can preview challenges and forecast growth.
What are the main elements of a business plan? There are two: the narrative, which is the story of your business, and the financials, which are the numbers. Both are equally important.
Let’s walk through a typical business plan. It is divided into sections or chapters, like a book.
1. Executive Summary. Here is where you quickly sketch why your business is necessary and what its activities will be. Briefly describe your service or product, the expected market, and the ownership and management of the business.
2. Objectives. In this section you describe more specifically your goals for your business and how you plan to reach them. Outline the structure of your business, set benchmarks and deadlines, and provide sales goals.
3. Mission Statement. This is the underlying rationale for the business and how it benefits your community. It can be one sentence or a paragraph.
4. Action Plan for Success. Here you expand upon the strategies you intend to use to reach your goals. This section includes specific elements. If you intend to manufacture a product, for example, you would outline the manufacturing process, the location, expected suppliers, and the mechanism for distribution and sales.
5. Time Line. This is typically a reference table showing dates and milestones to be reached. Your business plan will include much of the same information in both narrative and table form.
6. Company Summary and Ownership. The plan provides specific information on the company’s ownership and capitalizationwhere your money is coming from.
7. Company Location. The physical location of your offices and other facilities.
8. Products Summary. This is a more detailed description of your products or services. Include support services such as warranties and customer service.
9. Cost and Method of Production. Provide a more detailed description of how you plan to create your product or service and what the costs are.
10. Market Analysis. Chances are you are entering a market that is already established. You need to demonstrate knowledge of your competition and where your company will be positioned. Are you a budget or luxury provider? Is your product hi-tech or artisan?
11. Market Segment. What demographic are you targeting? What market share do you hope to capture?
12. Marketing and Promotion. Describe how you plan to reach your target market. Provide goals and a time line for reaching those goals.
13. Revenue Strategy. Detail how your company plans to generate income. This may not be as simple as it sounds, especially for an Internet company. Provide annual income goals.
14. Sales Strategy. Describe the process of entering the market and making sales. This is similar to the revenue strategy but with a focus on the customer transaction.
15. Management Summary. Provide names and qualifications of all key personnel. This information will be of great interest to investors.
16. Management and Staff Plan. Describe how your company will grow during the next five years and your staffing expectations. Include costs.
17. Financial Plans. This section includes a set of detailed tables or spreadsheets encompassing the next three to five years. They include annual budgets, a profit and loss projection, and projected cash flows. Any significant financial element must be included. These tables are the bottom-line standards to which the company’s performance will be judged in the years to come. They should be adjusted on a regular basis in order to remain relevant.
A well-written business plan will both provide you with a road map to the future and serve as a powerful sales tool when partnering with investors.
By: Thomas A. Hauck
Thomas Hauck Communications Services provides writing and editing solutions for businesses and nonprofits. Visit us at http://www.thomashauck.net/ for information on how THCS can impact your bottom line.
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7 Points Agenda For Business Success | Nigerian Entrepreneur
Creating a plan for your personal and business success cannot be over emphasized. If you fail to conscious make a good plan of how you intend to succeed in life, then you have just unconsciously planned to fail in life. …
Success of Business.
A unique and decent business card reflects the overall image of a company. Business card software allows you to create your own impressive business card with a host of professionally designed business card templates, … The success of any business depends upon a proper planning. A business plan should be a living roadmap to success, not just a one-time document. For accurate business planning one needs to take business…
5 Ways to Increase Your Motivation for Web Success
Increase your motivation for web success in 5 steps. Small business internet marketing tips on success. … Schedule that task wherever it is you schedule your appointments (I’m a big fan of the Google Calendar). Until you write it down and set a time to do it, your decisions won’t be decisions but things you put on the back burner. Also, when you set a deadline and stick to it, it helps you plan what you are going to take care of ..
Starting Your Own Business Without A Degree : Desktop Scripts
Starting a business without a degree is a difficult task, and in order to achieve success, you need to have a lot of patience. So, before you start your business, find out whether your intended product or service falls into an existing … -Create a proper business plan: You should prepare a formal working business plan. This will enable you to prioritize your work in a systematic manner and analyze your business tactics. A business plan…
PlanMagic Business Blog » 20 ways to stretch your marketing budget
Other companies who have the same customer base as you, but sell different products, are often willing to share the cost of a direct mailing. 15) Supplying business success. Your own suppliers can be a valuable source of business. … Our product line of business plan, financial plan, marketing plan and media plan software enables you to plan better and faster. We continue to set the standards in business plan automation,
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Tags: business plan, bussiness plans, complete business plan, mini business plan, personal business plan, simple business plan, successful business plan
Business Plan Financial
Business Plan Financial Projections
Business plan financial projections seem daunting because they are so uncertain. This very uncertainty, however, is what makes preparing them easy because you can’t possibly be right. You can’t predict the future. None of us can. All you can be is competent in the way you prepare your business plan projections.
Before you finalize your business plan this year, consider these six caveats to preparing your business plan financial projections:
1. Don’t offer pull-out-of-the-air, ‘conservative’ guesstimates about getting some percentage of the overall market demand or year-over-year growth.
It is a mistake to assume that business investors will appreciate your being conservative with your business plan financial projections in the early years of your business. Don’t think for a Wall Street minute that presenting ‘conservative’ business plan financial projections indicates ‘realism’ to prospective business investors. Business investors invest for one reason: to earn a return on their money. How long the money is invested influences the amount of the return earned. Let’s say a business investor wants to triple an investment. Well, if that investment triples in 3 years, the return is 44%. If it triples in five years, the return is 25%. Adding just two years to the investment period nearly halves the return! Now do you see why time is so important to a business investor? Here are a few other examples: let’s say a business investor wants to:
Make 5 times an investment in 3 years = 71% return
Make 5 times an investment in 5 years = 38% return
Make 7 times an investment in 3 years = 91% return
Make 7 times an investment in 5 years = 48% return
Make 10 times an investment in 3 years = 115% return
Make 10 times an investment in 5 years = 59% return
So, while you may find it attractive to figure out how to make ‘just a living’ until the business venture proves itself, you now understand why business investors want sales and earnings to grow absolutely as fast as possible, without being deceived, in your business plan financial projections. On the whole, business investors are risk averse only to the extent that they don’t want to lose their money or tie it up in a low return investment. Typically when you make the claim that your business plan financial projections are ‘conservative’, it usually just means that you have no idea how and why you’ll achieve a certain level of sales within a certain time frame. Interesting, these kinds of estimates, provided that you’ve done some good thinking about market segments and overall demand, often turn out to be too low. Remember, it’s just as bad to underestimate your sales, as it is to overestimate them.
2. Avoid calculating costs as a straight percentage of revenues. Sure it’s easier to do things this way, especially with Excel and other business plan financial projection software. Costs are real, however. You need to know what they are very specifically. If you’ve done your homework in developing your business plan, then you should already have this information, or at least the basis of it. Just estimate and calculate your costs on a product-by-product basis. With these warnings in mind, use the following steps to develop your business plan financial projections:
Think about what percentage of the overall market share your competitors already own. Assume that they will continue their present trends in growth. (Note: some competitors may
already be trending down and losing market share.) Temper your market share estimates with some discussion of how your entry into the market will affect these trends. Then, estimate the percent of total, potential demand that remains available to you.
Now, based on the limitations of your operations plans, calculate how much of this remaining available demand you can achieve. This is a very simple calculation. Start with your overall productive unit capacity and factor it by the expected yield of sellable product, then multiply these unit sales by their respective selling prices and voila, you have the revenue numbers for your business plan financial projections.Let’s take an example.
Your research indicates that 2 out of every 10 females age 23 to 55 will under go some type of non-invasive cosmetic treatment in your area. Your research also shows that this number is expected to grow 20% each year over the next 5 years. There are 40,000 females in your target market. You identified four competitors in your target market. These four competitors currently handle on average 6 procedures a day. You plan to start a non-invasive cosmetic treatment center that uses the most advanced technology and is thus capable of performing an average of 7 procedures a day. Using this data you calculate the following statistics about your market and market potential:
Total market 40,000 females x 20% = 8,000 procedures per year
4 competitors x 6 procedures x 250 days = 6,000 procedures per year
Available procedures: 8,000 less 6,000 = 2,000 per year
Your productive capacity: 7 procedures a day x 250 days = 1,750 or 21.875% of the total market. The average selling price for a procedure is $400. Thus, the revenue for the first year in your business plan financial projection would be 1,750 procedures times $400 or $700,000.
Now, let’s say you’re were projecting 2,200 procedures per year. This would mean that you would have to alter your operating plan to be able to perform 2,200 procedures. You would also have to demonstrate how you would capture an additional 200 procedures from your competitors. Granted this is an over simplified example, but it should give you a feel for how this process works.
Regarding price, in most cases you should have a clear idea of how to price your product or service. There are usually other, similar products or services out on the market. Unless your competitive advantage is a cost reduction and/or unless price is a critical basis of competition, just estimate the value of your improvement and add it on to the average price currently offered in the marketplace. In order to make this estimate, you’ll have to be talking to potential users. Find out what they pay now. Find out how they feel about the current price. Ask them if they’d be willing to pay more and how much more. If you ask enough people, you’ll get a general idea.
3. Never determine price on the basis of a margin you think is attractive.
The market will pay you only for the value you deliver, which is determined by the consumer paying the final price. It’s easy to make the mistake of thinking that a 20%, 40% or even a 60% margin is great. Never considering that if the product or service you’re offering provides a real advantage. If you do this, you may be grossly underestimating the price you can get in the marketplace and underestimating your business plan financial projections. Consumers don’t think in terms of margins. They could care less about what you ought, ‘reasonably’, to get for your product. That’s why you must find out the most that they’ll pay. This is the value of your product or service. Come up with some reasonable basis for determining this real value. Keep in mind the obvious: If the consumer’s value on the final product or service is less than your cost plus a reasonable profit to keep your business growing, you’re in trouble. Your business model will not be sustainable and your business plan financial projections useless.
Now calculate the costs of manufacturing and distributing your product. These costs flow directly from your revenues estimates and operations plan. How much will it cost to purchase what equipment and materials, hire what personnel, engage in what selling efforts, pay what accountants and lawyers, rent what kind of space and so forth, to achieve the revenues you’re showing in your business plan financial projections. You must be very specific. Project your costs over time. Keep them tied to the units you need to sell to achieve the revenues in your business plan financial projections.
Obviously, costs and revenues work hand in hand.
4. Keep your fixed cost low.
Keep in mind that none of these revenues and the cost estimates are going to be perfectly accurate, which means the amount of profit or cash available to pay ‘fixed’ cost isn’t going to be accurate either. As a result, you can lose your shirt trying to pay for equipment, a receptionist, or other activities that don’t contribute to the sole objective of making sales. Wherever possible, rent space, rent time on equipment, answer your own phones, etc. To the extent that you keep costs variable in your business plan financial projections, you can cut back when sales are slower than expected. It’s the worst situation to have a big, well-furnished office with an expensive secretary who needs the job, when the money isn’t coming in. High fixed costs in your business plan financial projections also send the wrong message to investors that you know more about the ‘form’ of doing business than about actually making money.Now pull all your numbers together to prepare the financial statements that summarize your business plan financial projections. You need three basic statements: cash flow analysis, income statements, and balance sheets. All of these come directly from the above calculations. Your cash flow analysis indicates when and what amounts of capital infusion you’ll need to start and sustain your business plan. Make your income and balance sheet projections on the assumption that you’ll get the capital. For the first year or two of your business plan financial projections, present each of these statements on at least a quarterly basis. Monthly is best. I suggest doing a 24- or 36-month projection depending on your growth plans and changes in the industry that you foresee. Follow these monthly or quarterly projections with annual projections till you cover a span of 5 years.
Finally, run through some ‘what-if’ scenarios or sensitivity analysis. Though you business plan financial projections should be based on your best, and best-supported estimates of costs and revenues, you know you can’t be 100% right. That’s why it’s important to identify those elements or assumptions of your business plan financial projections that you feel are most uncertain. Write out the nature of the uncertainty and the range you think the estimates will fluctuate up or down. Then change the estimates accordingly and re-run all your statements. Pay close attention to how your business plan financial projections, especially cash flows, change when you change each assumption. This will help you determine how much ‘cushion’ you have available and, if business isn’t going according to plan, at what point cash will become an issue.
5. Do not simply assume that costs and revenues may be ‘off’, up or down, by some percentage.
Again, I know that Excel makes it easy to do this. For all the same reasoning as above, stay focused on the assumptions and details that make up your business plan financial projections. It’s the details you need to examine for their sensitivity and their impact on the bottom line. You only need to alter those specific items that you’re most uncertain about. If it’s revenues that you’re worried about, is it the price, the volume, or both that concerns you most? How big a swing in the estimate are you worried about, in what direction and why? If it’s your cost projections that are keeping you awake at night, which cost elements and why? Things like rents and labor costs can be determined fairly accurately. But maybe you’re unsure about materials or labor availability or how efficiently you can produce your products or provide your services. Maybe you’ll have to pay extra to ensure their availability. This kind of thinking forms the basis for running ‘what-if’ or sensitivity analysis on your business plan financial projections. 6.Do not include every possible business plan financial projection scenario in your business plan.
Both you and your investors need to know what aspects of the business plan financial projections are most uncertain, represent the most risk, in what direction, why, and how they affect the bottom line. Having hundreds of alternative scenarios to sort through is like a man with two watches showing two different times… he never knows what time it is. Lots of alternative business plan financial projections also indicate that you’re not too sure about anything. This is an impossible way to communicate with business investors, manage your business, or make important decisions. It’s much more effective to identify the risky areas of your plan, tell why and how they impact the bottom line and what actions you plan to take if they occur. This helps you and your business investors stay focused on the high impact areas and to think clearly about whether other factors should be considered as well. It also lends more credibility to your talents and increases the likelihood of your plan’s success.
Finish this discussion with a summary of the critical aspects of your plan and related contingency plans. If you’ve followed all these steps, then you can figure out what you’ll do if your actual performance turns out to be different than your business plan financial projections. Remember, you’re purpose is to demonstrate to business investors that you’re competent; worrying about protecting their investment and running a business, not just flying by the seat of your pants.
Author: Michael Elia
Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. For more information about business plans and raising capital for your business or to review his business plan manual, visit Business Plan Secrets Revealed.
Article Source: http://EzineArticles.com/?expert=Michael_Elia
Tips for Your Business Plan Financial Projections
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Federally Funded Small Business Financial Port in a Storm
A business also needs to demonstrate — via quarterly cash flow projections — its ability to meet current and future debt obligations, including future repayment of the ARC Loan.
We are at the end of our series on Business Plans. Can you believe it? The Projections section could be included in your Financial Plan, but it could also stand-alone as its own section.
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