10 Steps to Small Business Success
Thursday, June 16, 2005
Starting a business, given its share of rewards and risks, is a serious endeavor and requires considerable preparation. If you are going to accept the challenge, then you must do everything you can to improve your chances for success. This process involves the mastery of ten steps.
Develop your personal and company goals
New business success requires a combination of knowing what you are doing and capitalizing on a good opportunity. Develop and clearly state your goals in a written plan, which will then serve as your road map.
Define a viable market segment for your product or service
Define an unmet consumer need first, before you develop a product to satisfy that need. Regardless of how astute you may be in business, if the market isn't there to support you, then you cannot expect to go very far. However, the majority of entrepreneurs first come up with a product they think is "hot" before determining the existence of sufficient demand for the product.
Develop your marketing plan
The purpose of the marketing plan is to describe how you will attempt to create and maintain customers for a profit. It needs to state whom you are going to sell to, how you are going to penetrate the market, why you will be successful with your sales campaigns, and finally, how much you will sell annually over the next five years.
Write your initial version of the business plan
Your business plan must reflect the unique environment you will be operating in as well as what you plan to be your competitive advantage. It is an outline of the direction in which you plan to take your company, an analysis of your business strengths and weaknesses, and a skeleton from which your formal business plan will later be developed. It will assist you in securing the key people you need, and it will also help you to begin developing your financial projections.
Determine your financing needs
Once you have developed a rough business plan, you can begin to determine your financing needs, which will be incorporated into your formal business plan. Your marketing analysis leads to sales forecasts, which determine your staffing level, which defines your operating budget, from which you can generate financial projections and determine your projected cash flow.
Form your key teams: founders, management, and directors
You must make sure you have put together a solid management team. The rough business plan you developed in Level IV should help you to attract top talent to your company.
Finalize your financing needs and create your formal business plan
Starting with the rough business plan, put together a full-fledged formal business plan. A business plan should convincingly demonstrate that your business can sell enough of its product or service to make a satisfactory profit and be attractive to potential backers.
Develop a marketing strategy to obtain financing for your company
Set up a strategy to sell yourself and your company to financiers in order to raise the capital that your business needs.
Market your plan successfully, attracting capital on your terms
Once you've developed a strategy for approaching financing sources, you must make use of the negotiating tools that will give you an inside edge on the competition and enable you to attract capital.
Market your product/service and manage your business to achieve your goals
The last step in the process involves the ongoing management and marketing of your business. Getting a company started is only half the battle. Once you're in business, you will need strong management tools and marketing skills in order to make sure you stay in business.
Strategic planning for small businesses
Tuesday, June 14, 2005
Many entrepreneurial ventures mistakenly belief that strategic planning is only for large businesses that can afford the time and personnel to develop a sound plan. However, if you are to compete in the marketplace against the "big guys", you need to learn some of their gameplans - and strategic planning is a major part of any successful, large business. That does not mean that your startup needs all the bells and whistles of the more complex plans.
What is strategic planning and how does it differ from other types of planning? Strategic planning involves setting up a strategy that your business is going to follow over a defined time period. It can be for a specific part of the business, like planning a marketing strategy, or for the business as a whole.
Differing businesses use various time periods for their strategic planning. The time period is usually dependent on how fast the industry is moving. In a fast-changing environment like the internet, 5-year plans don't make sense. In industries that change more slowly, longer range planning is possible and desirable.
Writing a business plan is different from strategic planning. One writes a business plan when one is starting something new - a business or a product/service line within a business. Strategy looks to growth while business planning looks to beginnings. Part of the strategy of a business may be to introduce a new product line. That product line would then have its own business plan for its development and introduction. Without a strategy your business has no direction.
There is no set format for a strategic plan. There are a large variety of models. The important criterion is find a model that is workable for your particular business.
In its most basic form, the critical components are:
Business Purpose
The business purpose is often also called the mission of the business. It is a brief statement about why the business exists - what you want to achieve. This does not need to be complicated, but it must sum up the essence of what you are trying to do as a business.
Organizational Goals
Goals are the ends to which your efforts are aimed - how you plan on accomplishing your purpose or mission.
Strategies for Reaching Each Goal
A strategy is another way of saying what approach are you going to take in reaching this goal. The important thing in this step is to build in checkpoints to ascertain that the strategy is working and to be flexible about changing if need be.
Action Plans to Implement Strategy
Action plans are the specific activities that you will be using to implement the strategy. It is good to have this step stated as precisely as possible so that you can measure progress towards its achievement.
Monitoring Plan Implementation
Here is where many, many strategic plans fail. If you don't follow through on whether the plan is being followed and how it is doing, you might as well have not spent the time doing it in the first place. Put checkpoints in and make it a point to not let them pass unnoticed.
