How to Write a Solid, Common Sense Business Plan

This article was written by Hillel Pitlik, SCORE Orange County Management Counselor

Frequently, our SCORE clients start to write a plan without having gone through all the preliminary thinking needed to answer the many questions that surface during the planning process. I’m reminded of the definition of a lecture by a college professor. “A lecture is the process of the professor transferring the ideas in his lecture to the notes of the student, without passing thru the brains of either.” I submit that a method that allows for exploring the questions and developing the answers will, in the end, result in arriving at a well thought out plan for the business idea in question.

What is such a direct approach? In principle, it is a diary like method that captures the thinking of the prospective entrepreneur step by step. It starts by obtaining a ledger book with non-removable pages.

Start the process on the first left hand page of the diary. In 150 words or less write your business idea or description. To the left of the entry enter the date. The left hand pages are reserved for questions that arise during the process; the right hand pages are reserved for the answers. To the left of each question (on the left hand side) should be date of record. On the left hand page to the right of the question should be the projected date when you will have the answer to this question. When you answer the question, date the entry.

Each time a question occurs to you enter the question. As answers are obtained they will appear opposite the question they refer too. As the process progresses, answering of the questions may beg still other questions, and so forth.

Simple questions such as: “Who is the competition? What resources will I need? Where should I locate the business? Is my personal status such that embarking on the enterprise is reasonable? Etc. must be answered.

In addition, I recommend that you periodically, (bi-weekly) rewrite the business idea without reference to the original statement. Then compare the two, to see if the business concept has changed as the question/answer process has proceeded. Becoming aware of the subtle changes in the idea may well lead to a better business in the long run.

Many of the questions will deal with financial issues that must be answered with spreadsheets and cash-flow projections. Pasting in such entries is encouraged. Thus, the diary is the embodiment of the evolution of your business idea from start to Business Plan.

You should be aware of how successfully you have adhered to your question answering schedules. This self scheduling method will keep the process moving forward apace. In addition, it is beneficial to reread the diary periodically to assess your basic progress toward getting the business started.

The actual Business Plan is then, simply, an extract of the research that you have conducted thru the diary. Viola, that wasn’t so hard after all.

Know Your Breakeven!

This article was written by Dick Ginnaty, CPA

Knowing your breakeven (i.e. the amount of sales (annually, monthly, weekly or daily) required just to pay all your bills) is essential anytime but even more so now during this soft economic time. Knowing your breakeven, and knowing the fixed and variable costs that are required to calculate it, is critical.

Step 1 is to analyze your costs and to classify each one as either fixed (i.e. those costs that tend to remain regardless of your sales, such as rent) or variable (i.e. costs which vary directly with sales, such as material costs for a manufacturer, wholesaler or retailer). The keys here are to look hard at your fixed costs to determine if they can be made variable (i.e. will the landlord accept a percentage of sales instead of a fixed monthly rent), and to analyze your variable costs to determine if they can be reduced without suffering quality deterioration.

Step 2 is to divide your fixed costs (either annually or monthly) by your variable cost profit margin (Sales less variable costs). The answer to this calculation is your breakeven sales dollar (i.e. the amount of sales in dollars, so that after paying for all the variable costs associated with the sales, all fixed costs are covered also.)

IF after you make this calculation, you find you are selling at less than breakeven, it is time to act. Look hard at all costs because failure to cure the problem (not generating enough from your sales to cover all your cost is the prescription for disaster.

Good luck and here’s hoping it “all adds up” for you.

I Want to Hold Your Hand!

This article was written by Bob Bradley, SCORE Orange County Management Counselor

Who said the Beatles aren't still popular? I heard one pundit say that talking about the Beatles to younger folks right now would be like our parents (those of us a little longer in the tooth) talking about Jimmy Durante (who is he?) when we were kids. "Who cares?," we would have said, give me some more Rolling Stones, Led Zeppelin or Queen.

This pundit may have been correct if those in this market had to get prompted by a blitz of magazine, newspaper and television ads to get in their cars, drive to the local music store, try to find the Beatles among hundreds of other artists, titles, and sultry CD artistry. But this is not the case today, quimo sabe, (pronounced ke-mo sah-bee, a reference made in the old Lone Ranger TV series). Today things can be promoted, accessed, reviewed and virally distributed via this thing called social media. Consider the following:

When Apple's iTunes added the Beatles to their database on November 16th about twice as many people in the UK visited iTunes from social media sites compared to search results.  Hitwise says Apple received a "huge spike" in UK traffic coming specifically from Facebook. The week prior to launch Apple was the 86th most popular outbound destination from Facebook. It jumped up to the 20th after launch. One in every 200 web site visits that left Facebook went straight to Apple's web site.

What about the US? Similar results. A substantial increase in the volume of Facebook to Apple traffic after the Beatles premiere.

So is search obsolete? No way. During this same time Beatle related searches increased 30 times in the UK while the US experienced a 20% increase in searches for the EXACT word "beatles" on November 16, one day before the grand launch.

All of this would have been hard to believe when the Beatles were launching their "I Want to Hold Your Hand" in 1964, which became number one on the charts for 7 weeks and ultimately their best single selling single worldwide.  It is very believable in 2010 because of all the methods of communicating directly with potential customers using today's technology.

The bottom line? The world has changed, marketing has changed, distributing products and information has changed, selling and promoting have changed. Change with it. Embrace it. Capitalize on it. Visit a counselor or attend a workshop and "get your hand held". Our's are waiting. Score114.org

You can find this article and over 85 other internet marketing articles, including social media and how-to's at Robert J Bradley's Blog. Settle down for a cup of coffee and get your daily fix of internet news at the BradleyDaily.

Building Effective Communication Skills

This article was written by Bern Lefson, SCORE Orange County Management Counselor

Various studies have shown that managers spend anywhere from 50% to 80% of their time communicating. Effective communication is rarely discussed as a prime factor in a manager’s success. Yet, if one spends this much time communicating one should try to be quite good at it.

For example, assume you are responsible for managing a team of five people to achieve stated monthly goals. How could you successfully lead your team without constant effective communications? Answer: You couldn’t. It’s not just how well you speak or the spoken words you use.

You must write effectively, too. You’re probably required to write e-mails, memos, policies, and procedures. Readers must understand your words and act in the manner you desire. Good communication is critical to effective management. Here are some simple suggestions to improve your managerial communications.

1. Get feedback from your staff. Top athletes know how important feedback is. That’s why they hire personal coaches. One trick to good communication is to ask your staff person(s) to replay the instruction or goal you just communicated.
2. Spend quality time assessing your communication in an honest and straight forward manner. One of my CEO’s used to communicate to the employees at the 13^th grade level. Many employees were confused because the average successful communication grade level is at the 8^th grade level.
3. Examine your company impartially to learn how their communication affects your staff. The effectiveness of communication should be based upon the company culture. Decide how corporate communication is affecting your team. Is it a positive? Is it causing some problems? Should it be lacking, give some extra effort to improve your personal style.
4. Work with your staff to create a consensus about how to handle communication issues. Ask, “What everyday information should be available and how should it be shared and communicated?” Or “How do you believe we should handle disagreements?” Staff agreement on these simple issues invariably leads to better communication for all.
5. Listen, listen, and listen. Learn to be a dedicated listener. There is no better simple tip to become a better communicator than to really listen to the comments from your staff, your peers, and your superiors.

Good communications tends to be more art than science. Your success is often dependent simply on establishing communication lines that are open and honest. Sometimes, even unpopular decisions made by senior management can be expressed in positive and meaningful ways.