7 Secrets to Making PR Work for You
Do you do public relations for your business? Many small business owners neglect PR because they think it takes too much time or requires hiring a PR person or agency. Others think their businesses just aren’t newsworthy or that they can’t write a good press release – so why bother?
The truth: PR is a great way for any business to get noticed – for free. “Earned” publicity – publicity that comes from a blog, newspaper, or magazine writing about your business – is far more valuable than “paid” publicity (that is, advertising). Prospective customers trust earned publicity more, and it has long-lasting results in terms of building your brand and your credibility.
The nuts and bolts of PR have changed a bit in recent years, with the advent of social media and the rise of the Internet, but the basic rules of PR still hold true. Here’s what you need to know:
1. Get to know your target. Just as in any type of marketing, understanding what your target market wants and needs is key to success. In this case, your target market is the media – journalists, bloggers, TV and radio reporters, etc. To find out what they need, pay attention to what they already write about. A local reporter who covers the retail industry is the perfect person to pitch your new store to, while the reporter who reviews restaurants won’t care.
2. Craft your pitch and press release. There are many websites that provide templates for pitches and press releases. PRLog.org is one my company uses, but PRNewswire and PRWeb.com offer useful tools, too. Following a template helps by suggesting how and when to use hyperlinks, photos, and other elements to add interest to your pitch or press release. Of course, format isn’t the only thing that matters when writing a pitch or press release. You need to find a “hook” – something timely, interesting, or newsworthy to the media person you’re pitching. If your retail store sells children’s toys, for example, a pitch about the “10 Hottest Holiday Toys for 2015” will get parenting magazines or mom bloggers intrigued.
3. Hit the target. Send your pitch and press release to your target media members. Email is the generally accepted method today; you can find most media members’ emails on their publications’ websites. Use an attention-getting subject line that clearly states what you’re offering without being boring.
4. Follow up. Develop a spreadsheet of media contacts with contact information to help you manage your PR efforts. After your first pitch, follow up if you don’t hear back – but don’t be a pest. I’ve noticed a disturbing tendency of PR people emailing me the day after (or even later the same day) I get their pitches to follow up. Give people some time to get through their emails before you hit them with a second attempt – but do follow up; emails often fall through the cracks.
5. Make an offer. Spell out what’s in it for the media if they take you up on your press release. Provide some useful data (such as statistics from a survey you’ve done), an interesting or compelling quote, an offer to serve as an interview source, or an invitation to your grand opening or other event.
6. Be active. If your business targets local customers, getting out into your community is a great way to get PR. Become an active member of local networking groups, Chambers of Commerce, and other business organizations in your area. Local media often reach out to these groups when they need quotes or interview subjects, so being involved gives you a better chance of getting press.
7. Make the most of it. Once you do get publicity, make the most of the attention by posting the article on your website, framing it in your store, and generally spreading the news about your 15 minutes of fame. Also be sure to thank the journalist or blogger for the attention – that helps build relationships and leads to more publicity.
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Choosing a Business Name: 5 Interesting Things to Know
There’s plenty of advice out there about choosing a business name, such as the need to do a name search in your state, a trademark search, register the name, and other key legal issues. Those are all important factors to consider as you choose a business name.
But I’d like to focus today on five considerations you should also be thinking about. These five things may be overlooked when choosing a business name (or thinking about a re-branding of your business):
Dot Com Domain Names Still Rule
Today’s small businesses depend on Web presence to generate leads. Prospective customers are researching businesses online before they buy, so being findable online is crucial.
Before you settle on a choice for a business name, go to your favorite domain registrar, and search to see whether the .com URL is available. The “dot com” version of a name is still the go-to address that most of the public thinks of automatically. So whenever possible, try to get the dot com version of your chosen name.
Otherwise, you may end up like me – buying that dot com extension at auction on the secondary market later –for thousands of dollars. After years of vainly trying to encourage people to use our chosen domain name (which was close but not exact), I finally caved in and purchased the one that matched my company name and that people tended to automatically think of, and redirected it to our company website. So now we no longer “leak” that misguided Web traffic, but it did cost us.
Newer Domain Extensions Can Be Catchy
Absent that – or perhaps in addition to a dot com – consider the catchiness of some other top level domain extensions. Today we have many more choices for domain extensions, to the point that they can become a clever part of your name.
Consider a name like Lesson.ly. The “.ly” extension is used as an integral part of the name.
Some of the new domain extensions suggest the type of business you may be in. For instance, a consultant might opt for a .guru domain extension, as in JohnQSmith.guru. A photographer might opt for a .photography domain, as in SuperSnazzy.photography or something similar.
There’s no rule that says you are limited to just one domain name. You can always have two or more using some for specific marketing purposes – just make sure they are directed properly to your website.
Will Trendy Names Stand the Test of Time?
Names, like fashion, go through trends. A number of years back, names with “crunch” in them were trendy. Think Techcrunch. Names with dropped vowels were also trendy for a long time - such as Unbxd. Or adding in extra letters was cool, such as the three b’s in Dribbble.
Consider, though, whether that trendiness will be difficult to spell or remember. Will the public remember to drop the right combination of vowels, or to add in that extra letter?
Catchy vs. Descriptive
There’s a trade-off when choosing a name. Go for marketing memorability? Or go for findability online or in yellow pages? Have you ever wondered why there are so many service providers named “AAAA Best Plumber of Skokie, Iowa” or “AAA Pest Control of Hunstville, Arkansas”? In the days when yellow pages ruled, businesses wanted to be first on alphabetical lists.
When the Web showed up, names shifted toward the descriptive terms that the public looked for in search engines (“Lima Oklahoma Used Car Dealer”).
But consider whether you’re letting the tail wag the dog. For many businesses, you want the public – buyers – to remember your name. A catchy, memorable name often trumps one that is designed to get people to find it when searching.
Of course, the best names manage to do both: make it easy to find when searching, yet are memorable. Or the business owner gets two domain names – one that matches the brand name and one that pairs up with searches.
The International Dilemma
The world is becoming a small place when it comes to commerce. The majority of companies that export are small businesses. Business owners who are thinking ahead have to consider not only how that name sounds or what it means in the United States, but how it plays in other countries and languages. Years ago, Chevrolet allegedly named a new car model the Nova – only to have it pointed out later that in Spanish, Nova meant “it doesn’t go.” That turned out to be an urban legend about Chevrolet that has now been debunked according to Snopes.com – but the lesson it represents is still valid. If nothing else, it’s wise to consider whether your business name will be pronounceable and spellable in countries you may plan to sell into. And consider whether there’s already a famous competitor in those countries with the same name.
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The Difference Between Benefit Corps and Certified B Corps (And Deciding What’s Right for Your Business)
Most people start a business with one key objective in mind – making a profit. Yet some companies seek out not only to profit but also to provide a tangible benefit to society and the environment. These companies, depending upon a few specific criteria, are classified as Benefit Corporations or Certified B Corporations.
Confused by the difference between the two? Didn’t even realize there was a difference? You’re not alone – it’s one of the most confusing aspects of a recent movement for companies focused on giving back. Benefit Corporations and Certified B Corporations have a lot in common, but there are a few key differences.
To date, 31 states as well as Washington, D.C. have passed laws creating a new type of corporation – the Benefit Corporation (often referred to as “Benefit Corp”). Benefit Corporation status involves a separate process available to companies in every state. These companies pledge to think about people and the planet in addition to profit (most are committed to a specific social mission), but Benefit Corporations voluntarily work against standards of corporate purpose, accountability, and transparency.
Benefit Corporations have a corporate purpose to create a positive impact on society and the environment, and are required to consider the impact of decisions on workers, the greater community, shareholders, and the environment. And while Benefit Corporations are required to provide an annual benefit report that is available to the public, benefit corporations do not have to be audited or certified.
In addition to 31 states and Washington D.C., five additional states are currently working on laws for benefit corporation status. You can explore your state’s Benefit Corporation law status here, but as always, it’s best to consult your tax advisor or attorney if you’re considering transitioning to Benefit Corp or Certified B Corp status.
Certified B Corps
Certified B Corporations are similar to Benefit Corporations but not identical. Certified B Corporations (also referred to as “B Corps” or “B Corporations”) are for-profit companies that pledge to achieve social goals as well as business ones and are certified by the nonprofit B Lab to have met rigorous standards of social and environmental performance, accountability, and transparency. It’s similar to USDA’s certification for organic milk or a LEED certification for a green building, with one key difference – a B Corp certification evaluates the entire company (environmental footprint, community involvement, governance structure, worker engagement, etc.) rather than just a single aspect like a building or a product in the examples above.
The broad evaluation is key because it helps to distinguish the companies that are focused on doing good from companies that just happen to do good marketing. There are now more than 1,000 Certified B Corps in the United States, including well-known companies like Ben & Jerry’s and Patagonia. All of these companies share a similar goal in that they are working to redefine what business success is – they are hopeful that companies will continue to compete and do what is best for the world around them.
The government categorizes Certified B Corps as 501(c)3 nonprofits. To become certified, your business may need to amend its governing documents or adopt benefit corporation status (see above) to meet the legal requirements for certification for your state of incorporation and corporate structure. And as with any restructuring, your business should engage key stakeholders, legal counsel, and investors about the usefulness and implications of adopting these legal changes for raising money, selling your business, and directors’ liability. If your business is a corporation, you’ll need to file your amended articles with your Secretary of State within one year.
The belief that businesses exist solely to make a profit can have an impact on how companies operate. Focusing on your business’s positive impact on society and the environment comes with benefits. Here are a few to consider:
- Benefit/B Corp status can help companies attract and retain top talent and customers
- Millennials, which represent half of the global workforce, want work with meaning – a recent study by Intelligence Group found that 64 percent of millennials would rather make $40,000 annually at a job they love and care about than $100,000 at a job they find boring or less meaningful
- According to BBMG, 73 percent of consumers consider the company, not just the product, when making a buying decision
- Consumers often align purchases with their values – 86 percent of consumers are more likely to trust a company that shows the impact of its cause efforts, according to Cone Communications
There are also some drawbacks to consider if you’re exploring the pros and cons of Certified B Corp/Benefit Corp status:
- If you have shareholders, you will also have expanded reporting requirements in order to provide shareholders with enough information to determine if your business is achieving its stated purpose
- If you have shareholders, they can bring charges against the company for not carrying out its social mission (just as they could sue directors of traditional companies for violations of fiduciary duty)
- These designations are fairly new as far as legal entities go, so it’s not entirely clear how courts will interpret mandates to not only seek profits, but to consider potential benefits to society. As such, the impact on raising capital and on how angel investors and venture capitalists could react is still unknown
There are a few legal requirements to consider when thinking about Benefit Corporation or Certified B Corp status. When it comes to your company name, Benefit Corps and Certified B Corps do not need to make any reference to benefit status within the corporate name. You won’t need to alter the name you’ve chosen for your business, nor would you need to tailor your name brainstorming any differently than if you were considering a standard C Corporation. You will be required, however, to state your Benefit Corp/B Corp status in your articles of incorporation, and you may want your articles to highlight a specific purpose (like benefitting the arts, improving public health, etc.)
Finally, the share certificates of a Benefit Corporation must specifically state the benefit nature of the corporation. Certified B Corp and Benefit Corporation legal requirements may vary between states, especially when it comes to provisions relating to shares and their transfer, so be sure to research your local laws.
For entrepreneurs, business owners, workers, and consumers, the introduction of Certified B Corps and Benefit Corporations is an exciting development, because it enables community- and environmentally-minded business owners to preserve their social goals without sacrificing the ability to make a profit.
Are you using your small business as a force for good?
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Nonprofit Success Depends on Your Business Mindset
Running a nonprofit takes passion dedication, and a big heart. Whether you’re working to save endangered animals, slow climate change, or help your neighborhood prosper, it’s easy to let your mission take center stage. After all, tirelessly serving that mission is key to your nonprofit’s success.
But are you looking at your nonprofit like a business?
While the mission-focused work of your organization is essential, that on-the-ground progress simply won’t happen unless you’re in a business mindset. Money, paperwork, and procedures all add up to help your daily work have a greater impact on the causes you care so much about.
As you put plans in place to launch your nonprofit, keep these three essential business components in mind:
When you start a nonprofit, you have to start separating your automatic association between “making money” and “profit.” You’re not in this business for the millions, but cash flow can make or break your meaningful work in the nonprofit sector.
Along with good money management, responsible funding at a nonprofit leaves room for reinvestment. If you’re planning to receive grants or other funding specific to particular projects, you may not be able to plan for “extra” money in the bank. But it’s wise to think of ways to put money back into your nonprofit, just like you would think about how to invest revenue back into a flower shop or consulting firm.
That reinvestment might come in the form of launching a new program, boosting a social media campaign, or budgeting to give a dedicated employee a raise. By keeping costs in check, your nonprofit can manage its funding to go the furthest possible distance.
Nonprofit executives can get a bad rap for taking large salaries. But try not to think about the extreme cases of poor fiscal responsibility. Think about the people who work with you, and the tasks you rely on them to perform. Who takes care of your annual reports, IRS form 990 filings, and audits? Who oversees marketing so that your organization gets the word out about your efforts?
A team of entry-level staffers may be eager to work, but in many cases it’s worth the higher price tag for a seasoned professional. When you review job descriptions, make sure that your team is making salaries comparable to their colleagues in the private sector. Providing healthy compensation for those professionals who are essential to your nonprofit mission builds the strength of the entire organization, while keeping your staff excited to come to work each day.
Don’t leave yourself out of the salary equation, either. As much as you we might wish and hope, passion alone can’t pay the bills.
You may not be expecting huge returns like a for-profit business, but your nonprofit will need a plan for growth. A complete business plan for a nonprofit should cover your cash flow -- including how you intend to raise money to support your work -- along with realistic salaries and anticipated rent or lease costs. Don’t forget administrative expenses, and the little things like copy paper that add up quickly.
When it’s time to apply for grants or reach out for other forms of funding, that business plan can help you make a solid case for your nonprofit.
But no good business, whether for profit or a worthy cause, was magically built overnight. Many SCORE mentors across the country have worked in nonprofits, as executives or as founders -- and sometimes both.
Your local office can match you with a mentor that can help with your specific needs, or you can browse email mentors who are versed in the nonprofit world.
So go ahead, kick your feet up onto your desk and start thinking of the big picture for your nonprofit. How can you apply for-profit business lessons to your work for the greater good?
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Let’s Pop the Bubble on Startups, Ideas, and Investments
Maybe it’s because business schools teach it that way. Maybe it’s because it’s easier to write about. Maybe it’s because of the dream and the glamor involved. Whatever the reason, there is widespread misunderstanding about the reality of business ideas, startups, and investors.
This misunderstanding results in a stream of questions on social media, blogs, and entrepreneurship sites. They come with different wording around these core concepts:
I have a great new business idea, but no money. Where do I find investors?
I want to start a business but I have no money and no contacts. Where do I get investors?
I have a great idea for an existing company. I don’t have the resources. How do I sell it to them?
I have a great business idea but I don’t have experience or resources to execute. How do I sell my idea?
Let’s look at reality in this area. Consider this a reality check.
1. Very few startups get outside investors.
Only two or three of every 100 real startups get outside investment from angel investors, and about one per 1,000 get venture capital in the beginning. That’s a hard number to track down because statistics vary and they depend on definitions. The SBA reports about half a million startups with employees per year, but there are about five times more businesses without employees than those with, so I figure anywhere from half a million to two million startups per year in the U.S. alone. The Angel Capital Association says there are only about 75,000 angel investments and 5,000 venture capital investments per year, and many of those are duplications, second and third rounds, or new investments in already-existing companies.
Those numbers make sense to me. After all, outside investment is a special case in startups, related to the best of the best, normally only startups with a lot of potential growth, experienced teams, and product-market fit. Investors need companies that aren’t just likely to succeed, but likely to succeed and sell out within five years or so.
What doesn’t make sense is how many people think the natural, normal process of starting a business involved getting somebody else’s money. That’s the exception. The rule is elbow grease and shoe leather, struggling to get the first customers, focusing on a subset of the larger vision, starting with what you have, not what would be ideal. This is the realm of the normal, in which entrepreneurs turn to friends and family for help, they borrow from house equity, and they work their startup in their spare time. And sometimes, when they have a business plan and some minimal startup resources, they go to their local banks and get an SBA-guaranteed loan through the bank.
For those who complain that they can’t get startup investment, as if that were a natural right, I say welcome to entrepreneurship. Nobody is entitled to startup investment. Build a startup that’s a good investment, and you’ll get investment. Do the work.
2. Nobody invests in business ideas.
No offense, but your idea, no matter how good, has no value. What gives it value is the work involved in getting started. You develop the idea, gather a team, do a product prototype or minimum viable product, and prove the concept with actual users, subscribers, customers, distributors, or whatever consists of traction in that business.
You don’t even own that idea. If it’s an invention, you have to design and describe and win a patent to own it. And patents don’t always protect against imitations. You can own a creative work with copyright, which covers books, software, pictures, and art. You can own commercial words, images, sounds, and such with trademark. But you don’t own a business idea.
Companies don’t buy ideas. They don’t even listen to idea-holders wanting to pitch ideas.
3. You have to do the work.
A business idea doesn’t make you an entrepreneur. It doesn’t entitle you to investment. It puts you in the same boat as the rest of us, facing the journey of execution that turns an idea into a business of value. You aren’t entitled to financing; your business has to earn that with milestones met and progress made.
Does that sound daunting? Here’s the good news: If you’re there, at the start of the journey, you’re in good company. Millions of entrepreneurs have done that already, the vast majority of them without somebody else’s money to help. Solve a problem, give value, make the world better for your potential customers, and you can do it. Do the work.
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5 Reasons a Business Revolving Line of Credit May Benefit You
Many businesses at one time or another may have cash flow challenges. One popular option to obtain short term funding is to secure a revolving line of credit. This not only helps with basic day to day operations, such as meeting payroll, purchasing supplies, increasing working capital or obtaining extra inventory; it also provides many other benefits.
What is a revolving line of business credit?
In basic terms, a revolving business credit line refers to a bank or merchant offering a specified amount of always available credit for an undetermined amount of time. The debt is repaid periodically and can be borrowed again once it’s repaid. There is no set monthly payment, but interest accumulates and is capitalized like any other credit. As a business makes payments on the revolving credit line, those funds become available for borrowing again. The credit limit may be used again and again as long as you do not exceed the maximum limit.
Having access to a source of funding is an essential part of success in business, but not all forms of financing are created equal. Unlike other kinds of lending, a revolving business credit line offers a number of advantages over other types of funding such as:
1) Flexible Payment Terms – Traditional term loans require set monthly payments that can potentially present a challenge to the growth of a start-up business. On the other hand, a revolving credit line offers flexible repayment terms. Unlike a term loan, if a business has a slow month it can pay the minimum amount due.
2) Personal and Business Separation – One of the challenges many business owners face is keeping personal and business expenses completely separate. The benefit of a revolving business credit line is that it enables you to streamline and track your business expenses since your credit line is dedicated solely for business.
3) Access to Cash on Demand – Unlike a traditional loan, a revolving credit line enables you to source funding before your business actually needs it. Because of the cyclical nature of business, you may find yourself wanting to borrow money to take care of your company’s short terms needs. By being able to access funds on the credit line at any time you can keep your business running smoothly, day in and day out.
4) Builds Business Credit – Businesses need to establish ratings with the major business credit reporting agencies. Using a business revolving line of credit allows you to build a positive payment history that appears on your company’s business credit report. This will allow you to potentially obtain future credit for your business based on your company’s creditworthiness.=
5) Flexibility of Usage – A closed-end loan is for a particular use whereas a revolving business credit line allows you to decide what to spend your cash on for your company. Since the credit line is revolving a business can use the cash for multiple purchases compared to a loan that can only be used for one purpose.
A business revolving line of credit provides companies the flexibility needed to meet their short term funding needs. When the need for cash is there, funds are there. By having access to cash on demand, you can take your mind off of money and focus on running and growing a successful business.
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Tips on Buying an Existing Small Business or Franchise
The dream of owning a small business doesn’t always mean starting from scratch. You can skip the headaches of creating a startup and jump to buying an established company. Purchasing a franchise offers another path to entrepreneurship. With either option, someone has already developed a solid foundation for a company. Here are some resources to help you decide if buying an existing independent small business or franchise is right for you.
Research Your Options
Even if a business seems successful on the outside, a closer inspection before purchasing is critical. In the SCORE podcast, “Buying a Business,” mentor Norm Silverstein details how to thoroughly examine an existing company.
When you acquire an established business, you inherit important intangible assets, such as a customer base and brand recognition. Risk is potentially lower than owning a startup because you will have immediate cash flow. Also, the previous owners have hopefully ironed out the kinks in the beginning stages allowing you to focus on the future.
After finding an affordable, promising business, Silverstein recommends using a “due diligence” process to determine if the company is a right fit. Some of the financial factors to investigate include:
- Profit and loss statements from previous years
- Projected financial statement
- Last three years of tax returns
- Cancelled checks
- Lease conditions
You want to learn as much as possible about the business beyond what the seller tells you. An attorney, accountant and a SCORE mentor can advise you during this intensive process.
Ready to Purchase?
You found your dream business, which passed a thorough investigation. Now what? You must decide whether to purchase the business entity or its assets. These are the major differences:
- Buying the “business entity” entails buying the corporation or limited liability company (LLC). You inherit the assets and contracts but also its debts. You may not know what is lurking beneath the surface, such as tax liens or unpaid loans.
- Buying the “assets” means you are buying the tangible items like equipment and property. However, you must create a new company with new loans, leases and contracts as if the seller’s business no longer exists.
For more details on the types of purchases, read the entire “Buying a Small Business: Assets vs. Entities” article.
Buying into a Community
Another road to small business ownership is purchasing a franchise. Bob Melberth, a franchisee coach, details the pros and cons in the SCORE podcast appropriately titled, “Franchising.”
What exactly is a franchise? An entrepreneur buys the license of a larger trademarked company to sell its products or services. The new offshoot is backed by a well-known brand name, training and support from the larger company and fellow franchisees. Melberth says, “You're in business for yourself, not by yourself,” highlighting the community aspect of owning a franchise.
With this established business structure, the success rate of a franchise is usually higher than an independent business. You don’t need to be an expert in all aspects of running a company because the franchise provides specific guidelines to help sell their products. Even though it’s a franchise, it’s still your business.
Finding your ideal business can be a lengthy, involved process, but remember that you don’t have to do it alone—a SCORE mentor can help you along the way. After thoroughly examining the foundation, you may find an existing independent company or franchise is the answer to your small business dreams.
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This July 4th, We Salute Veterans Who Own Small Businesses
Independence Day is right around the corner, and as the preparation begins for 4th of July festivities, it’s important to recognize the contributions that veterans have made not only while in service, but as business owners. These men and women make exceptional entrepreneurs because they have the know how and leadership experience.
For many service members transitioning into a civilian lifestyle, entrepreneurship is a preferable option for the next phase of their lives. One in every ten entrepreneurs in this country is a veteran. Fortunately, there is a great deal of veteran-specific resources to help veterans utilize their unique experiences to build better businesses.
Here are five essential resources that can help service members connect the dots between service experience and business ownership through tailored counseling and training necessary for success:
- SBA Veteran-owned Business Guide: This is a one-stop portal with links to programs and resources, financing information, government contracting opportunities, and other resources for veterans.
- Operation Boots to Business: Boots to Business is a transition assistance program that gives service members essential training to build a successful business. The curriculum offers key steps for evaluating business concepts and the foundational knowledge required to develop a business plan to veterans exploring business ownership or other self-employment opportunities. In addition, participants are introduced to SBA resources that can help them access start up capital and additional technical assistance.
- Business Resources for People With Disabilities: Starting a business can be a great opportunity for veterans with disabilities. In addition to meeting career aspirations and goals, owning your own business can provide benefits such as work flexibility and financial stability. This page offers resources to help disabled people start, grow, and manage a small business.
- Office of Veteran Business Development (OVBD): OVBD offers veteran-entrepreneurship training programs, a network of localized Veteran Business Outreach, and specialized loan programs through SBA partners. OVBD works to provide veterans, service-disabled veterans, reservists, active duty service members, transitioning service members and their spouses, dependents, and survivors with the training, counseling, and access to capital that they need to start and grow a small business.
- Veterans Business Outreach Centers (VBOCs): VBOCs provide entrepreneurial development services such as business training, counseling and mentoring, and referrals for eligible veterans owning or considering starting a small business.
Are you a veteran business owner? What resources were helpful for you when you first started your business?
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What Business Plan Type Is Best for Me?
Shakespeare wrote, “A rose by any other name would smell as sweet.” I say a plan by any other name is still a plan; but many different things get labeled "business plans."
You'll see that label on:
- Strategic plans
- Annual plans
- Operational plans
- Feasibility plans
- Business plans for startups seeking investment money
And of course I use the term “lean business plan,” which is what I say all business owners need. No wonder it's confusing! Here are a few tips to help you sort it out.
1. Start At the Beginning
All business plans begin with this basic principle: form follows function. What do you want from your business plan? The answers to that question determine what kind of plan you need.
2. Think Lean
At its heart, every business needs a lean business plan. It’s faster, easier, and much more useful than the mythological big business plan. It’s what every business owner deserves as a tool for optimizing the business. The Lean business plan:
- Leads off with bullet points for strategy. This is for your own business eyes only, not for public consumption. It's not explanations, rationales, or supporting documents. It's a simple list of reminders about focus: your target market, your product, and your business's identity. Sometimes it also includes a breakdown of what you'll call "success" — but it's quick and dirty, in list form only
- Develops the right tactics. You can have a great strategy, but you'll never make it happen without tactics. These are also bullet points featuring what you've decided are the key points of your marketing, product, financial, and recruitment plans. These are for your team's eyes only, again … not for outsiders. And they'll cover pricing, channels, social media, launch dates, products, services, features, and so forth
- Includes concrete specifics. This is where you list your assumptions, milestones, tasks, deadlines, responsibilities, and performance expectations. The key here? Measurable, trackable, and accountable
- And finally, pulls everything together in budgets. These are concise, too: your sales forecast, spending budget, and cash flow
With this lean business planning as a jumping-off point, you continue a regular process of review and revision to keep it fresh. Even if your business doesn't need an elaborate plan, it'll benefit from this framework. Review and revise as needed, at least once a month.
3. Those Other Types of Plans You May Need
Again, because terminology tends to "bleed" from one type to another, don't rely on labels. Think of the function of the plan and you'll be able to narrow down the type that will best serve your business needs. Here are a few more common scenarios.
Plans for Banks, Investors, Buyers, and Partners
When you're presenting a business plan to a bank, angels, or other investors, your latest revised "lean" plan is the first draft. Once again, remember, that plan is just for management; you'll need to dress it up to include the additional content that outsiders will want and need. Among these items are:
- Summaries and Explanations: make sure your executive summary is strong; that's all some of your outside target audience will read. Keep it short, and make sure it fits the need. If you're immersed in a selling-the-idea or selling-the-potential mindset in the written plan, your summary should include key highlights that will pique those readers' interest. Your lean plan also won't include detailed explanations of your strategy, your company, your market, or your product. It has just summary tactics for marketing plan, product plan, financial plan, and management plan. Think of your readers – outsiders looking in – and help them understand the business. Achieve the specific goal of this dressed-up business plan
- Formal Financial Projections: while the lean plan might be fine with just sales forecast, expense budget, and cash management, a formal traditional business plan has to include formal financial projections that respect finance and accounting standards and include Profit and Loss, Cash Flow, and a Balance Sheet. Banks will want to see projections of key ratios as well, and investors will like a Use of Funds table and sometimes a Break-even Analysis.
Startup plans should be lean business plans with the simple addition of estimating startup costs and financing tactics. They become plans for investors or banks only when the startup looks for financing from investors or banks.
Operations or Annual Plans
Operations plans are lean business plans by another name – and annual plans should be lean business plans narrowed down to just the next year.
Growth or Expansion Plans
A growth or expansion plan tends to be narrower, with a focus on a specific area or subset of a given business — for example, plans to develop new products. These plans can be strictly internal, or they can be linked to loan or investment applications. And they should adhere to the principles of the lean business plan.
Growth or expansion that's being funded internally needs only internal plans, but don't skimp on the details. Know what you're funding before you fund it: take the time to estimate both potential sales and expenses for the new product.
On the other hand, if you're pitching prospective investors, whether banks or individuals, approach a growth plan as if you're pitching the business from scratch. You'll need just as much detail in terms of company and product descriptions, management team backgrounds, and solid financial data.
Strategic plans tend to be a subset of internal plans. They focus on strategy and tactics, but skip the detailed financial data and milestones of an operations plan, with a focus on company-wide priorities. In that context, one key to setting strategy for your company is carefully examining your strengths and weaknesses as a business. Knowing what your company does well enables you to play to your strengths and select the right opportunities to optimize them. That way, you're funneling resources efficiently, to the areas where they provide the best payoff.
Conclusion: Do Only What You Need
With all the different meanings of “business plan,” I recommend you use good planning to help you run your business as well as possible. Keep it lean. Don’t make it a document for outsiders unless you have a business reason to show a business plan to outsiders. Keep it fresh. Use it to get what you want from your business.
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Franchise Buying Tip: Bounce Your ideas Off of Others
Bouncing your ideas off of others is a strategy that can and should be used before making any major purchase, like the purchase of a franchise business – especially because it’s easy to lose perspective when you’re focused on all of the intricacies that go into choosing and researching a franchise that you feel is right for you.
I really like the British *definition of the word “perspective.” This: “The proper or accurate point of view or the ability to see it; objectivity.”
If you’re seriously contemplating the purchase of a franchise business … or any kind of business, you are way too close to it. You’re too close to get the proper perspective. Your decision-making skills have the potential to be affected in a very negative way. That’s why it’s wise to bounce your ideas off of people you like and trust.
When to Bounce Your Ideas Off of Others
You really need to make sure you do this at the right time in the process. Don’t get others involved too early, as you aren’t going to know enough about the franchise concept and all the bells and whistles that are part of the opportunity you’re interested in. You need to make sure you have a good understanding of the business, and what your role as an owner would be, before you bounce the idea off of others. You also have to make sure you’re *ready to become an owner. In other words, before you bounce your ideas off of others, you need to be pretty serious about investing your money in a franchise.
You definitely shouldn’t ask for opinions on what you may be about to do too late in the process, either. That’s because you may be at the point of no return. That’s the point in which you’ve convinced yourself that whatever franchise opportunity you’re looking at is the perfect one for you. You’re 100 percent sure that it’s “the one.” Once you’ve made the mental decision to buy, it’s going to be almost impossible for anyone you confide in to slow you down, or even to reverse your decision.
The best time to approach others about your future plans is during the middle of the process. Not too early and not too late.
There are all sorts of people you can share your ideas with.
Friends who have proven to be open to different things are good people to bounce your ideas off of. The more open the better.
Friends who own small businesses are wonderful people to bounce your ideas off of too. After all, they’re living the trials and tribulations of business ownership every day.
Caution: Some independent business owners are what I call “franchise-negative.” They don’t like franchise businesses. Maybe they’ve had to compete against a franchise business or two, which is no easy feat. If you find some negativity when you bring up the word “franchise,” you may have to go find another friend to share your plans with.
Certain family members could prove to be good choices to share your ideas with, too. Who’s really successful in your family? Talk to them. See what they have to say.
Use Business Experts Too
Since you’re thinking of going into business, consider approaching business experts with your ideas:
- Contact business professors at colleges in your area. See if they would be willing to spend some time with you
- Contact SCORE. They have experienced business counselors on staff who listen to business ideas all day
- Your local Small Business Development Center (SBDC) has business counselors on staff, too. Not only can you bounce your ideas off of them, you’ll also be able to tap into the information they have on financing and business plans
Don’t do this alone. Buying and owning a franchise business is a big commitment. Don’t keep everything to yourself. Bounce your franchise ideas off of others – you’ll be glad you did.
*Non-U.S. Government links