Plans for 2010

At a family Christmas gathering my new nephew by marriage asked how my business was going. "Slow" was my response. People don't seem to have enough money or passion to pay someone else to write or edit their business plans, I explained.

Well, my nephew is a computer engineer and extremely bright. Before I knew it, he was telling me an idea for a new business. Amazingly, the business was in a growing industry in which I volunteer -- helping people aging in place. He didn't want to start this business himself; he just saw it as an opportunity. He had had no idea that I already had a passion in this area. Soon, he was asking me questions and giving me a whole new realm of ideas. He opened up new pathways of thought for me. He started talking about me writing my own plan for a new business.

My goals for 2010 suddenly took on new dimensions, and I became more impassioned. Now, I'm thinking of taking all my years as a member of the Advisory Board for Aging in Place in Darien and turning them into a business.

Later, I talked to another computer-engineering nephew, and he spoke about the importance of focus and passion. He has realized what he wants -- what stimulates him. That is how he can perform at a high level -- doing what he loves in the right environment.

So my advice to all you entrepreneurs out there is talk to people about your ideas. Listen to the questions they ask you. Think. And get passionate. Plan and take action.

It's a new decade. Reinvent yourself to work in your area of interest with people who make a great team.

Alms for the Poor Entrepreneur

Goldman Sachs and Warren Buffet have teamed up to give money to low-income entrepreneurs. But there's a catch. Most of the money will be connected to courses the entrepreneurs must take from community colleges and small business development centers. I used to run a small business center at Norwalk Community College and had a federal grant to mentor low-income people who wanted to start businesses. It was very worthwhile work. Out of 80 people we mentored, about three actually started businesses.

That's why I wish that some of the Goldman-Buffet largess ($500 million) would also go to entrepreneurs who already know what they are doing but are finding it hard to get the capital to jump-start their businesses. I know several entrepreneurs like that.

Banks have cut way back on the money they're lending to small business. They are cutting back on credit lines and credit cards. Small businesses are hurting badly, even though new small businesses are the engines of growth and employment in our great country.

I think community colleges are wonderful. And I believe it is essential for business owners and entrepreneurs to understand business. But there are many other ways I believe this money could help more businesses to get started and grow.

Read more here: http://money.cnn.com/2009/11/17/smallbusiness/goldman_sachs_warren_buffet_small_business/index.htm?section=money_latest&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_latest+%28Latest+News%29

10 Questions Your Business Plan Must Answer

This week an entrepreneur called me to see if I could help her develop a business plan. She found me on the Internet and had been intrigued by my Web site, particularly my list of 10 questions a business plan must answer. http://www.upstartbusinessplanning.com/15601.html

I told her that I had developed the questions based upon my 10 years of experience in writing business plans and my 15 years of mentoring and teaching entrepreneurs. Since I've been trying to include useful tips in some of my posts, I thought I'd put down my list of 10 Questions. These are the sorts of questions you need to answer to develop a successful business and to be able to interest investors or lenders. There are a lot of ways to express the essentials that are covered by my questions. I'm using language with the least amount of jargon.

If you want to learn the venture capitalist jargon, know more about business planning or speak to me about answering the questions for your business, email me at: upstartwyn@gmail.com.

Ten Questions Your Business Plan Must Answer
1. What is your big idea?
2. What are you selling?
3. Who will buy it?
4. Why will they buy it?
5. How large is the market of potential buyers and is it growing?
6. Who is your competition and how is you business different from theirs?
7. What will it take to make and sell your product or service?
8. How will you get the news out to potential buyers?
9. Who makes up your management team?
10. How and when will you make a profit?

Business Tip: Know Your True Competition

One of the most common mistakes entrepreneurs make is thinking that they have no competition. I can't tell you how many have told me that their idea is so new and innovative that no competitors exist at all. But the truth is that some other product or service is competing for the customer's time, attention and money. Investors know this. They always look askance at businesses that claim no competitors. Investors want to read a good competitive analysis and know that you know what your competitive advantage is.

You may just have to think more broadly. Who is a partial competitor? Who is in a related industry who might jump into your category and become a competitor?

I just read a great quote from Mike Linton, who is the former CMO for Ebay and Best Buy, which shows how even large, established industries don't always understand who their true competitors are. Read it, and think of how this might apply to your business and category. The quote appeared in Ad Age.

"Don't be blindsided by the competition and get lost in what innovation is.
Record labels still believed they were each other's competition even as they engaged in legal battles with music download, peer-to-peer sites and the consumers who used those sites. They didn't see that consumers were bypassing the $19.99 CD en masse while Apple created a colossal digital-music franchise."

Start-Up Tip - How Will You Make Money?

In an era when companies like Twitter can raise millions in capital and have no revenues flowing in, you may wonder why your business needs revenue or profits to exist or to raise capital. Twitter is simply in a league by itself. Investors invested in young, smart people with track records. That can happen -- but not very often.

The average Joe or Jill has to be able to demonstrate to investors that their business idea can make money. That means you need to plot out how you're going to do it. I've had all sorts of ideas of how I'd make money, if I were running Twitter, but they are not about to hire me. I'm not young and hip.

Making money is not that mysterious. You make a product or create a service, and you sell it to customers. Of course, Twitter doesn't sell its service. Google doesn't either. But Google does sell pay-for-performance advertising.

So, ask yourself -- What am I selling? What can I charge? With pay-per-click or pay-for-performance advertising, the market determines what you can charge. Demand drives the price and the volume because advertisers bid on the keywords they are buying. This works the same on Bing, Yahoo! and other pay-for-performance search engines and ads.

But what if you sell knives? You have a great design. Where will you sell it? What will you charge? How will you get it to consumers? What will it cost to manufacture? All these calculations go into figuring out how you're going to make money. Even if you don't like to do math, learning to do this kind of math is essential (and fun) because it empowers you to understand your business. Entrepreneurs who understand their businesses can more easily raise money and can have an easier time making money.

Take a look at other products on the market and see what price points they sell at. Find out what the sales volume is. Think about your wholesale price to your customers and how that will compare to the retailers' final price to consumers. Figure out the mark-ups and the profit margins. What is normal in your industry?

And while you're at it, remember the importance of having a brand. It doesn't cost a lot to make Nike sneakers, but Nike charges a lot for them because of their brand name. Can you create a valuable brand like Nike or Google? Even Twitter has become a valuable brand because of all the people using it. It's helping to fuel the revolution in Iran. How powerful is that?

Start-up Tip - What Will It Cost to Start Your Business?

When a group of entrepreneurs called me a few months ago about editing their business plan, I asked them how much money they wanted to raise. They said $150 million! I truly could not believe my ears. How could a new venture possibly cost that much?

Well, they were planning on purchasing all sorts of heavy equipment to create a renewable energy business and setting up shop in several states. Another potential client needed $1.5 million to pay lobbyists to help effect legislative changes that would make their business more viable and create demand.

Even in a booming economy, these are not reasonable start-up expenses, in my humble opinion.

But in a recession, you really need to consider bootstrapping. Start as small as you can and expand organically, plowing profits back into the business. Capital has dried up. Banks still are not lending; lines of credit are shrinking; friends and family don't have disposable cash to lend or invest; VCs and angels are pickier than ever.

So you need to ask yourself, what is the minimum I need to get started? Write down the expected expenditures on paper or in a financial computer program like Excel. Make yourself a spread sheet. Think of the cash that will need to come in to cover monthly expenses and capital expenditures. Ask yourself if you can go without a salary? Without benefits?

Here are items you need to think of:
Cost of you producing your product:
Raw materials
labor
machinery
warehousing, picking and shipping

Overhead:
office or factory or warehouse space
some office equipment
supplies
communications
IT
legal
accounting
insurance
travel
entertainment
marketing - advertising, pr, promotion, website, branding, graphic design, trade shows, etc.
patents

Depreciation
Interest
Taxes

Capital expenditures and leases
cars
equipment
land
software

The list goes on -- What can you do without? What is essential? Do you need to create samples? Brochures?

Figure it out and write it down.

If you need help, go to the Small Business Administration (www.sba.gov). I also consult or can provide my written guidelines to financial planning. email me at upstartwyn@gmail.com -- I know how to demystify financial projections and using Excel.

www.upstartbusinessplanning.com.

Start-up Tip #1 - What is Your Value Proposition?

Thinking of starting a business? As part of your planning process, you must come to grips with what your value proposition is. In advertising we used to call it a "unique selling proposition". But really all you're doing is figuring out what the true value of your business, product or service is.

How are you filling a real need in a unique way?

As you prepare to answer this question, think about who will use your product and why.

If you can answer this question in a 45 words or less, you are on your way to success.

Contact me, if you want more tips on crafting your value proposition.

Homeland Security and the Squid

Yesterday's Wall Street Journal had a wonderful article on how Homeland Security is using inventions from their more creative staffers and is paying grants to entrepreneurs to commercialize inventions that protect us. The story highlighted an invention called the Squid. It can reach out tentacles to trap a fleeing car at the border. The idea came from a Spiderman fan.

I think it's great that there is government grant money going to inventors and entrepreneurs. It's American inventiveness that keeps us going. But will the bureaucrats drag us down and make it too hard to commercialize and use the inventions?

To read the entire article, go to: http://online.wsj.com/article/SB124286185495041091.html.

Tip of the Week: Align Business and Personal Goals

What happens when your business fails? Your personal life? A few years ago, I heard a highly successful entrepreneur speak about the ups and downs of owning a business and how he got a second chance.

This man had so much success that he thought he was invincible. So he took all his profits and bought another company. He paid himself royally -- several houses, a yacht.... But he never saw his kids or his wife. He was too busy making money. I know this sounds like a trite story, but while the entrepreneur told it, it did not sound trite. Well, soon he was over-extended financially and emotionally, and when the last recession turned against him, he lost everything, including his family.

Somehow, he managed to start another business and remarry. But this time, he said that he first sat down and figured out what he wanted out of his life and what the business could do to help him realize his personal goals. He realized that he did want two houses, but he also wanted to go to his kids' soccer and Little League games. He wanted to have his wife involved in his business. He also wanted to be a good employer that would help his employees to lead good, productive, full lives, too.

The business, by-the-way, is a simple one -- securely storing paper files for other businesses. There is a huge demand for this, and this saw the need and met it.

He told the audience that it's really important for you to run your business to support your life goals, not let the business run your life. He is very happy now that he had a second chance to get things right.

If you own a business or want to start one, first make sure you've aligned your personal and your business goals.

Family-Owned Business Offers Best Service

Saturday, my husband and I had the chance to compare the service of a big box store and a family-owned business. I've been wanting to switch to an energy- and water-saving washer and dryer for a couple of years. I read Consumer Reports, shopped around, perused ads and finally decided to take the plunge. (Hey, I could help the economy at the same time.)

We went to Best Buy and had to wait for a sales person to be free. To complete the sale, we had to hear the pitch for the extra warranty. But the trouble started as soon as we said we needed to vent the dryer on the side -- not the back. Our sales person had no idea how to put that request into the system. She had to call the head of the department. He had to call Samsung (the manufacturer). They had to sell us a special part, and we would have pay extra for it to be installed by the person would would install the dryer at our house. (They had to go hunt for the part.) But they still weren't sure exactly how all this was going to happen or if this was the right course of action. They called in former sales people who had been promoted to flat-screen TVs. They did Google searches on the computer while we stood there. Soon, four sales people were standing around discussing what they should do.

My husband and I just looked at each other and said, "Forget it." We walked out of the store empty-handed. After a bit of calming down and going shoe shopping, we decided to go to a local family-owned store where we had purchased appliances in the past. It's called Aitoro. I hadn't gone there for because their Web site isn't very useful or informative, and they had remodeled the store during the boom to look very upscale. The formerly modest store now featured very fancy new kitchens designed to cater to the hedge-fund employees who live in our area. I was scared that Aitoro was now just catering to the wealthy extreme.

We walked in five minutes before closing. The saleswoman who greeted us as we entered helped us immediately. She saw I had Consumer Reports and encouraged me to look up the ratings as she showed us the various models they had. She questioned us on our needs.

Then she showed us a G.E. washer and dryer at a sale price plus rebates. The washer was Consumer Reports' top pick. Side venting of the dryer? NO PROBLEM! They service the machines themselves and had someone on-site who would install the needed part and get the dryer ready to go within the week. "We'll take the pair," we said.

By now, it was well after closing time. But our saleswoman didn't rush us. "We close when we stop making sales," said one of the other sales people, who was selling a new kitchen to another person.

As we walked out of the store, I realized what a key component superior customer service is to the sales process. Personal attention, care, knowledge all go into closing a sale. Family-owned businesses can just do this better, in my opinion.

What are your thoughts?

$10 Business

Could you start a business with only $10 to spend? A good friend sent me an article about a professor at the University of Alabama who has each of his students start a business on $10 or less. The students have to plow any profits back into the business. Most of the kids started typical student service businesses, and most of them made some money. But a few started more unusual businesses, and some made a couple of thousand dollars.

The students liked the project because it really made them focus on the essentials of what it takes to start a business. Some said it was the best course they took in college. Professor Armstrong says it makes people realize how resourceful entrepreneurs have to be.

Read more here: http://www.icsb.org/article.asp?messageID=136

VC Funding Down

It looks like more start-ups and expansion stage companies are going to have to bootstrap, rely on organic growth or seek funding from friends and family. Banks are curtailing lines of credit or raising interest rates to usurious levels. And now the New York Times reports that VC funding is way down. Green technology funding is particularly hard hit. Article synopsis:

Business / Economy

Venture Capital Investment Sinks

By CLAIRE CAIN MILLER

April 18, 2009

In the first quarter, only $3 billion was invested in 549 young companies, according to analysis by the National Venture Capital Association and PricewaterhouseCoopers.

http://www.nytimes.com/2009/04/18/business/economy/18venture.html

The Power of Small Business

When I visited a client yesterday in a small business building in Stamford, CT, I walked down a hallway lined with closed doors. Each door had a sign for a different company posted next to it. And I thought, "This is the heart of America. All these little businesses, owned by entrepreneurs. This is what we are made of and is what will save us."

Earlier in the day, President Obama signed a bill to help small businesses access capital from the SBA. That made me very happy because, over 90% of the jobs in our country are generated by small businesses. The ones in my client's building range from sports to the environment to Internet to God knows what. Americans are loaded with ideas of how to fill needs. We are very inventive and clever. But most importantly, we have a great work ethic. To start or run a successful business, you have to be willing to work long hours.

Recessions tend to bring the entrepreneur out in people. When you have no job, it's much easier to take the risk of starting your own business and creating your own job.

From Chicken Farmer to Great Entrepreneur

Jon Huntsman's life sounds like the true American dream. He grew up the son of a rural school teacher, which gave him a work ethic. After getting a degree from Wharton, he turned down a job at IBM to sell eggs. He used his experience as a poultry farmer to start and grow more busineesses. He always took unconventional routes. Wharton has posted a video of Huntsman talking about his life and business -- how he went from poultry farmer to starting a container company to founding a chemical company.

I'm a Wharton Graduate School alumna. When I returned for my class reunion, I was amazed at the brand new Jon Huntsman Hall which now housed the latest high tech classrooms and meeting rooms. Regular, good people can make money and share it.

Huntsman says part of his success is due to humility and to being open to new ideas and to learning. We all have a lot to learn from him. video: http://wep.wharton.upenn.edu/gis/media.aspx?gisID=60,

article: http://wep.wharton.upenn.edu/gis/article.aspx?gisID=62