Get Over These Dangerous Business Planning Myths
If you don’t plan your business because you don’t need a formal business plan document for a loan application or investors, you’re missing out. Planning is a tool for steering and managing your business – something that benefits all businesses, whether they need the formal document or not.
That fear and doubt so many business owners have (are you one of them?) is associated with several dangerous myths about business planning. So I want to dispel those myths with this post.
1. It’s about the management, not the plan.
Your plan exists to help you manage. It includes only what you need for its function, which is setting strategy, tactics and concrete specifics. You use it to track performance against plan, review results, and revise regularly, so the plan is always up to date. And that’s not a big document; it’s a collection of lists, bullet points, reminders and projected business numbers. I hope it’s gathered into a single place, as if it were a document, but it doesn’t have to be. And it’s only as big as you need, as polished as you need, as formal as you need.
Your business plan document, if and when needed, adds a lot of description and supporting information that aren’t in the main plan. That’s additional dressing. You add it when you have to in order to show a plan document to outsiders.
Every small-business owner suffers the problem of management and accountability. It’s much easier to be friends with your coworkers than to manage them well.
Correct management means setting expectations well and then following up on results. Compare results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating results, after the fact, to the people responsible.
2. Not all business planning needs rigorous market analysis.
Contrary to the myth, a business plan doesn’t have to include supporting information to analyze or prove a market — at least, not until later, if and when the business purpose requires it. Not that you don’t have to know your market — but you don’t have to describe it or prove it for a lean plan. You don’t have to show some outsider who you are, what you own, or any of that.
You don’t have to do a rigorous market analysis as part of your plan if you know exactly what you’re offering, and to whom. So what about market analysis? Think about the business purpose. Do you need the market analysis to help determine your strategy? Then do it. Are you ready to go with that strategy regardless? Then don’t sweat the market analysis.
3. Good planning doesn’t reduce flexibility. It builds flexibility.
People say, “Why would I do a business plan? That just locks me in. It’s a straitjacket.”
And I say: wrong. The dumbest thing in the world is to do something just because it’s in the plan. There is no merit whatsoever in following a plan just for the plan’s sake. You never plan to run yourself into a brick wall over and over.
Instead, understand that the plan relates long term to short term, sales to costs and expenses and cash flow, marketing to sales, and lots of other interdependencies in the business. When things change — and they always do — the plan helps you keep track of what affects what else, so you can adjust accordingly.
It’s not like change undermines planning; actually, planning is the best way to manage change.
So running a business right requires minding the details but also watching the horizon. Eyes down, eyes up. At the same time.
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Spanish-Language Affordable Care Act 101 Webinars for Small Employers
The U.S. Small Business Administration, the Department of Health and Human Services, and Small Business Majority will launch a series of Spanish-language webinars for small business owners on the Affordable Care Act. Every other Tuesday throughout the summer and fall, Spanish-speaking small employers can join representatives from SBA, HHS and Small Business Majority for ACA 101 webinars in Spanish. The webinars will provide small business owners with an overview of the law and information on how they can enroll in the small business health insurance Marketplace. Other topics discussed include market reforms, the small business health care tax credit, and the employer shared responsibility provisions.
A question and answer period will follow the presentation.
Below are the registration links for the upcoming Spanish-language webinars. SBA Administrator Maria Contreras-Sweet will kick off the first webinar on July 22.
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Getting Started With Exporting: Training and Educational Resources to Help You Take the First Steps
With two-thirds of the world’s purchasing power in foreign countries, exporting represents a big opportunity to tap in to new markets, expand your customer base, and grow your business.
However, getting started with exporting can sometimes feel like a complex maze of regulations, policies, and other barriers. To help small businesses understand how to overcome these barriers and prepare to sell internationally, the federal government has several free training and educational resources that enable entrepreneurs to chart the path to exporting success.
- The Small Business Administration provides a wide range of online and in-person training related to exporting. The Introduction to Exporting course helps determine if exporting makes strategic sense for your business and whether you are ready to take the next steps. The Export Business Planner is a free, customizable document that enables you to work through the critical processes of export planning.
- Through its network of trade finance specialists located in 19 U.S. Export Assistance Centers (USEAC) throughout the country, the SBA provides training and counseling on trade financing and U.S. government export financing programs to both lenders and small businesses. USEACs are a valuable resource for small business exporters, combining the international marketing expertise of Commercial Service staff with the trade financing expertise of SBA (and in some cities, the Export-Import Bank) staff in one location. Find an Export Assistance Center near you.
- Free and low-cost training and counseling on exporting is also available through the Small Business Administration’s District Offices, Small Business Development Centers and Women’s Business Centers. Find local training and counseling resources in your area.
- BusinessUSA has a full set of free tools to help you explore exporting, including a step-by-step wizard that determines how prepared you are and finds customized resources for your specific needs. Another wizard helps you find resources on how to finance exporting that will enable you to expand your business. The site’s Exporting 101 section is a comprehensive overview of how to sell overseas and includes market research tools, consulting support and other information that enables you to learn about exporting. In addition, you can locate free training and other exporting events in your area.
For more on exporting, including information on Small Business Administration export loan programs and other financial assistance, go to sba.gov/exporting.
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Employee Fraud: What You Can Do About It
Employees are one of your biggest assets, even though they don’t appear on your balance sheet. They help you operate your business and are the faces of your company brand. But employees can also be a big liability if they steal from you. What can you do to protect yourself?
Acknowledge the problem
*Recent statistics found that companies lose 5% of their revenues each year to employee fraud. Companies with fewer than 100 employees had 28% higher fraud losses than larger companies.
Fraud can take many forms, including outright theft of property (from paper clips to expensive inventory items), subtle theft by wasting time (focus on personal matters, sports events or other distractions), to embezzlement of company funds. Employees can be very creative in devising ways to steal from you, including creating bogus customers and invoices to siphon funds from the company.
Wise staffing practices
Having the best employees on your staff can go a long way in minimizing or avoiding fraud inside your company.
- Do background checks before hiring anyone new. You can check public records to look for bankruptcies and criminal records without permission from the job applicant. If you want to do a credit check (there’s debate about whether a bad credit rating is any indication of potential employee fraud), you’ll need permission. Note: About a dozen states bar employers from doing credit checks of job applicants and employees and Congress is considering similar federal legislation (see S. 1837).
- Get to know your staff so you can detect potentially bad situations. Those with financial difficulties, such as an employee experiencing a home foreclosure or one with a gambling problem, may feel impelled to steal. Those displaying unaccounted wealth, such as a Lamborghini suddenly being driven by an employee who was previously driving a Ford Focus, may raise suspicions.
- Create the right company culture. Let employees know how seriously you view any theft.
Implement systems for protection
As with the three branches of the federal government, checks and balances can prevent an employee from manipulating financial data. The less opportunity that employees have to steal, the lower the incidence of such action will be.
Frequent inventories can monitor and detect any employee theft of company property. Bring your accountant in to review your inventory and other financial information.
Make it clear that employee theft will not be tolerated and that violators will be prosecuted to the fullest extent of the law. Unfortunately, some small business owners ignore illegal activity, which then breeds more of the same.
As the business owner, it’s up to you to oversee what’s going on in your business. Look for clues that something nefarious may be going on, such as a bookkeeper who never takes a vacation or declines to delegate work. Limit review of the monthly bank statement to you and, perhaps, your accountant; don’t leave it to the bookkeeper to review the statement before you see it.
Create an anonymous reporting system for employees to tell you about suspected fraud without fear of retaliation. Tips are the *most common method of detection (), yet fewer than 20% of small companies have a system in place, compared with 70% of larger firms. If you want to implement a reporting system, it can be a web-based system or a special phone hotline for this purpose.
And keep your ears open to any talk from staff members about possible thefts that may be going on.
* Denotes non-government website
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My 100-Day Progress Report
It has been an exhilarating first 100 days on the job. When I was sworn in as SBA Administrator in April, I promised to “get more loans into the hands of entrepreneurs who reflect the diversity of America by making it easier for community banks and microlenders to become our partners.”
Following up on this promise, I recently announced a transformative new plan to automate SBA lending and streamline and simplify the agency’s underwriting process to attract more lending partners and open up new markets for small business owners who need capital to expand and grow. Days after this announcement, which will ease the burdens on lenders approving small-dollar loans to entrepreneurs, I appeared at a Clinton Global Initiative conference in Denver to help announce an exciting commitment called the Century Club. Eight Community Development Financial Institutions (CDFIs) each pledged to make at least 100 small business loans a year for the next 10 years, which will inject $1 billion of additional capital into America’s small business ecosystem.
Last week, we continued our progress in expanding access to capital. At the White House, I joined President Obama to announce a new initiative called SupplierPay. More than two dozen major corporations pledged to pay their small business suppliers faster and offer other creative financing solutions to get entrepreneurs access to affordable working capital so they have the payment certainty to make new hires and grow their companies.
We’ve also been focused on creating new opportunities for our veterans who wish to translate their military leadership skills into opportunities to serve their country as civilian job creators. We “rebooted” our popular Boots to Business entrepreneurship program – a two-day crash course in starting a small business followed by an eight-week, instructor-led online course. We’re now conducting this program for transitioning service members at more than 200 military installations worldwide. And last week at the White House, we expanded this initiative to serve veterans who’ve already transitioned out.
At Twitter headquarters, the SBA launched a new competition for entities – university incubators or local nonprofits – that help seed start-ups by offering up office space, mentoring, networking, business-plan assistance, and sometimes startup capital, too. We’re exporting the Silicon Valley support model to communities in Middle America. The competition will fund up to 50 accelerators that are focused on key industries like clean energy and health care, as well as those focused on underserved populations, including women entrepreneurs, minorities, and small business owners in distressed urban and rural areas.
In recognition of the reality that there are still communities disproportionately struggling in the aftermath of the Great Recession, I also launched Scale-Up America – another competitive program that will bring intensive SBA assistance to up to 14 cities with strong small business growth potential. We’re excited about this program, because more than 90 percent of new jobs generated by small businesses come from the expansion of existing businesses.
Finally, as an immigrant myself, I was proud to represent the United States in El Salvador to meet with the country’s new leadership and recognize the peaceful succession of President Salvador Sánchez Cerén. I had the opportunity to meet with Salvadoran small business owners, who provide 70 percent of the country’s jobs, and promote the bilateral Partnership for Growth plan signed by both nations in recognition of the increasingly important role Latin American nations are playing in the global economy.
These first 100 days have been a whirlwind, and I am buoyed by the energy and optimism of all the entrepreneurs I’ve met in cities across America. There’s still so much more to do. I hope you’ll contact me on Twitter @MCS4biz to keep the dialogue going as we continue our forward momentum into the fall.
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