Is Your Online Business Making This Mistake?

You have a good website, you are focused on your product, you work hard at the business and yet your website is not delivering the expected… What went wrong?

Mike Carlson (name changed) had a website that was perfectly in all aspects- it was running well, looked good and it was even on page one for some keywords. Yet he was getting practically no traffic and his conversions were abysmal.

Mike is no exception. There are plenty of entrepreneurs with online businesses who are unsuccessful in attracting traffic.

Mike just failed to plan well.

What Mike planned was that “I will sell this product, target this keyword and have an online shopping cart for 24 hour accessibility”

Mike failed to plan a strategy. He did not plan how to achieve his targets. He just planned what he wanted to do.

“Failing to plan is planning to fail”,you’ve heard this before. This is particularly true for businesses and no prizes for guessing; this applies to online business too. If you have decided to do business online and you have no plan, you are doomed to fail. Online business plans must be focused on all business activities which will lead you to your goal, help you to reallocate your resources to optimum use, analyze and make corrections & adjustments to get back on track if you ever deviate from your goals.

In the world of e-commerce you need specific planning

- What ecommerce business do you want to start?
- Is there a demand for the product?
- Is it too niche to generate revenue?
- How much revenue do you plan to target in the first year of business?

The above questions will help you decide the selling price and the number of people who must purchase your product for you to achieve the target. Your conversion rate will more or less depend on the conversion rates of your industry.

Once you get an approximate figure you can calculate the number of visitors you wish to browse your site. Then to need a workable plan which will get the required number of people to your website. This means that you much finalize what phrases are being used to search for the product and target the ones relevant to your product and traffic estimations.

A proper business plan will establish your business goals and eliminate unrelated unnecessary activities. After asking yourself the above questions you have a clear view of what you want from your online business in a given timeframe.

Online business plans may differ but there are a few broad guidelines which all such plans should include. They are knowledge of your market, content management and integrating your website design with SEO. Once you have the idea of a niche item you want to deal in you need to find the market for it. Then you need to refresh your website content periodically for search engines to fall in love with you. Your website planning, development, management and marketing strategies should be integrated with your business model for perfect harmony between each other.

An analysis of Mike’s business was that he just started selling products outright, targeting low traffic keywords and not finding the right people or the right market. In fact he was selling niche products to a generic audience. He did not research and did not plan long term He just focused on the present.

Know your customers

Here is some basic information that is needed before you launch your online business:

1. Who is my prospect?

- Demographic information

a. Where do they live?
b. What is their income group?
c. What is their age group?
d. What is their family size?
e. What is their profession?
f. Psychographic information
g. What is their lifestyle?
h. What are their beliefs?
I. What are their radio/TV watching habits?

2. Product usage information

- What is their hot button issue that your products or services address?
- How do they use your products/services

a. How much?
b. How much money do they spend?
c. What are their expectations from the products/services that you offer?

3. What is my prospects internet usage behavior?

a. What percent of your prospects look for your product/service on the internet vs. Yellow Pages?
b. What keywords or key phrases do they use to search products or services that you offer?
c. What percent of your prospects purchase your product/service over the internet?
d. What makes them decide to buy on the web vs. in store?

The plan for online business is very different from the plan for normal brick and mortar business. This business runs 24×7 non stop and closes as and when you, the business owner wants.

Focus on the customer

- What benefits do my products give my customers?
- How can I maintain their satisfaction levels?
- Why will the customers buy my products?
- How do I reach my target customers?

These are some questions which should be answered by your online business plan. Traffic generation is very important for this business and you may opt for free (article, blog, forum marketing) or paid (solo ad, Pay-per-click marketing, SEO) methods to generate more and more traffic.

The goals in your plan should be realistic, measurable and appropriate to your skill level and time scale. Your plan should include the details such as start-up costs, labor needs product quality, competition, the size of your potential market, profitability, necessary product support, legal issues and regulatory concerns, associated costs like shipping, inventory and repeat business potential and cross-selling potential.

Keep asking yourself these questions…

- How many visitors are coming to the site?
- How many visitors are new vs. old?
- How long does each visitor stay on your site?
- What does each visitor look at?
- What graphics, words, pictures, etc are generating the most responses?
- Which search engines are getting you the best prospects?
- Where else are your customers coming from?
- How many pages does the visitor look at?
- What are your website rankings?
- How much money have you made from the average visitor?
- Who are your biggest money-making customers?
- If you use PPC is it working and paying for itself?
- Which links are bringing your visitors and are they converting to customers?

Last but not the least, online business should invariably be related to something you love to do. The product or business should have an attraction value for you which will help you to not get bored while the time flies. A majority of businesses fail during the first two years after inception, mostly because its owners are no longer willing to put in the work needed to make it grow. By picking an area in which you have a natural affection and aptitude in, you will increase the chances of making your online business more than just passing fancy.

So get going and don’t forget to fail to plan a complete strategy.

Copyright (c) 2009 Ajay Prasad

Startup Essentials – The 5 Best Ways to Spend Money When Starting a Business

Finding ways to spend startup capital is easy, but there are a few things that should be included in every new business’s startup budget. The top five are:

Startup Essential #1 — Protecting Your Business

Setting up your legal obligations and protections correctly from the start is critical to building a successful company. It can be tempting to put off registering your entity (LLC or Corp) or paying for a business license until you start making money, but delaying is not the best option. Not only do those expenses keep you out of potential trouble, they also protect your personal assets from the liabilities of the business. Business insurance is another critical protection for any startup. Even home-based, one-person businesses should look in to small business insurance. The premiums should be pretty reasonable, and the protection can be invaluable if something goes wrong. Starting without setting up the right protections can also be a slippery slope…if you are okay for a month without paying those expenses, why not two? Or six? The longer you delay, the more you put your business at risk. Do your homework so you know exactly what is required for your business, and get it all squared away before opening day.

The total cost of registering your business depends on the state you are in. Entity registration ranges from a couple hundred dollars total to around one thousand, if your state (like California) includes exorbitant franchise fees. Business licenses and tax certificates are generally pretty cheap, under $100 in most areas. Business insurance varies greatly depending on your industry and coverage limits.

Startup Essential #2 — Small Business Software

Every modern business must have computers and the right software tools to minimize risk and maximize profitability. Without question, every small business should use a reputable accounting system. Peachtree is the best on the market for those who plan to grow the business. Don’t rely on the freebie downloadable versions any longer than absolutely necessary as they do not include the accounting tools that help to track and analyze profitability. In addition, your business should have an office suite, such as Microsoft Office, that includes a word processor, spreadsheet, and other programs. Contact management software is also important — your best marketing returns will come from the customer list you build yourself. ACT! is the best choice and is relatively easy to use. Other useful programs include office form templates, employee management software, and point-of-sale software that works with your Accounting system if you run a brick-and-mortar store.

Budget at least $500 to $1000 for the software you will need. Peachtree’s basic small business program is around $200, ACT! around $230.

Startup Essential #3 — Marketing Tools

Every business should plan to invest in at least two key marketing tools prior to startup — business cards and an internet presence. Business cards are still the primary means of networking…even employees of the largest online businesses all have business cards. You can get a couple of hundred for free through several print shops, but they will go fast. Select a high-quality paper and be sure the design and logo impart the image you are trying to develop. A web presence is an absolute necessity. You will need to purchase a domain name and web hosting service, as well as select software to build your web pages. The website software has come a long way — if you have basic computer skills, you can build a good website. This is not a place to scrimp and save. There are “free” web hosting services, but they are unreliable and flash built-in ads on your web pages. On the other hand, most businesses do not need a professional web designer to come up with a good site. Try the software and talk to the people you know…one entrepreneur we know mowed his web-savvy neighbor’s lawn for him while the neighbor put together a basic website using the entrepreneur’s software. Fair trade and everybody was happy.

Altogether, expect to spend at least $250 on just these marketing materials. Most businesses need to spend far more to market successfully, but business cards and a website are a good start.

Startup Essentials #4 — Time-Management and Organization Tools

Every entrepreneur needs a system for managing time and staying organized. Your time will be divided randomly among 582 different things every day, so the more organized you are, the better. Start with a daily planner. Look for one that is customizable (like the Uncalendar) so that you can develop the best time-management system for you. Develop a system for listing and prioritizing tasks and setting aside blocks of time to work on important elements of your business such as the marketing plan and managing the finances. Your planner should also include space to collect information about your business and competitors, your networking contacts, and any other critical data. A full-size (8 1/12 x 11) planner is far more effective than the smaller ones. Get started using your planner as soon as possible so that the habit is ingrained by the time you are buried under business responsibilities! Also include tools for keeping paperwork, supplies, and product organized…you will have too much to do to waste time searching for what you need!

A good time-management system should run about $50 to $100, organizational tools will vary (file cabinets, etc.).

Startup Essentials #5 — Information

As the owner, you will need to know all the details of what you are doing. From the legal setup to your target market, from your product specs to your store or website’s traffic patterns. First-time entrepreneurs tend to underestimate how much time and effort it will take to get up to speed on all of the aspects of business ownership. But, taking control by attending to the details yourself will reduce your risk and increase your chances of great success. Once your venture is up and running, the learning should continue. Stay on top of news and innovations in your industry, read biographies of successful entrepreneurs, read up on the latest marketing opportunities. While it is easy to answer a specific question through the free content available on the web, most entrepreneurs will need to spend some cash for tools (books, trade associations) to ensure the business gets off to the right start by covering every critical aspect of a successful startup.

Include at least a few hundred dollars into your startup budget, but the amount will vary depending on the type of business you are starting and the depth of planning you will do. Remember that the better you plan, the lower your risk. Add a monthly budget amount for continuing education such as books, industry magazines, and the like.

Business Planning For Recession Survival and Recovery

The New Basics of Business

With unemployment continuing to rise, home prices falling due to a surplus of inventory, and small business lending at a standstill, this recession doesn’t seem likely to end soon. The recovery will be slow and Americans will certainly not enjoy the prosperity of a few years ago for a long time to come. It’s not just economists who think this way. “Half the population in [a] new ABC News poll thinks both job security and retirement prospects in the years ahead will remain worse than their pre-recession levels.” (“Poll: Less Job Security is the ‘New Normal,’” ABC News The Polling Unit, June 15, 2009, analysis by Gary Langer) This confidence, or lack thereof, is an integral part of an economic cycle. The analysis goes on to say, “Those diminished expectations – plus the pain of the current downturn – are fueling retrenchments in consumer behavior that could fundamentally reshape the economy.”

Basically, consumers are hunkering down to limit spending, save money, conserve resources, and change the way they’ve been living. The major influence on the health of an economy is the psychological state of its consumers. When there exists a broad belief that spending beyond necessity is unwise, people will change their habits and as a result, some businesses will have to close their doors. The economy is molting into a new, leaner animal. Rather than react in desperation to avoid doom, firms should interact with the current situation with innovative and forward thinking actions.

No matter the economic slump, increasing profits is typically the number one goal of any business. To ensure profitability, a company must demonstrate a competitive advantage over others in its industry, either by cost leadership (same product as competitors, lower price), differentiation (same price, better services), or focusing on an exclusive segment of the market (niche). For long term maintenance of competitive advantage, a firm must ensure that its methods cannot be duplicated or imitated. This requires constant analysis and regular reinvention of competitive strategies.

A recession is the optimal time to reinvent competitive advantage because the pressure of a feeble economy will separate the strong businesses from the weak ones, with the weak falling out of the game entirely. Your business will be strong if you have a plan of action based upon a little industry research, an analysis of what you have and what you want, and continuous monitoring of the results of your plan. This kind of innovation is not only a necessity right now, but it is an opportunity to improve the quality and efficiency in the way you do business.

The three basic actions for growing a business in any economic climate are: improve efficiency (maintain output while reducing inputs, such as time and money); increase volume (produce more in order to spread fixed costs); reorganize the business (change goals, methods and/or philosophy). If you plan to implement one of these, you may as well plan to implement them all. By focusing on one of the above strategies, you will find a ripple effect that causes a need to address the others. This is a good thing.

Right now, growth may sound like an unattainable goal as businesses are grappling just to survive, but hey, “flat is the new up.” If a business can keep its doors open and lights on, then it’s doing better than many others. But lights and open doors don’t make sales, so making changes that attract business is in a sense, striving for growth. It won’t be this tough forever, but for now, putting some growth strategies into action may be what keeps your business alive, if not thriving.

Every Business Needs a Plan

Without a plan, there is little hope for growth, let alone survival. As my small business development counselor, Terry Chambers says, “If it’s not written, it’s not real.” That doesn’t mean it’s unchangeable, but it does show that you mean business. In order to accomplish your strategies of improving efficiency, increasing volume, and reorganizing your business, you’ve got to examine what you have, what you want, and how you plan to get there.

Sometimes it takes a significant event or change in existing conditions for a business to create a written plan. I think it’s safe to say that the state of the economy is a significant change that should prompt business owners to alter the way they’ve been doing things. If you already have a business plan, it’s time to get it out and revise it. Make sure your plan includes answers to these questions:

  • What do I want to accomplish?
  • What do I have to work with?
  • How have I done in the past?
  • What might I do in the future?
  • What will I do now?
  • How will I do it?
  • Is it working?

A business plan can be used as a vehicle for accurate communication among principals, managers, staff, and outside sources of capital. It will also help to identify, isolate, and solve problems in your structure, operations, and/or finances. Along with these advantages, a business plan captures a view of the big picture, which makes a company better prepared to take advantage of opportunities for improvement and/or handle crises.

Essentially, the three main elements of a business plan are strategies, actions, and financial projections. In order to cover all of the principle elements, you will engage in other types of planning:

  • Marketing plan: Includes analysis of your target market (your customers), as well as the competition within that market, and your marketing strategy. This plan is usually part of the strategic plan.
  • Strategic plan: Asses the impact of the business environment (STEER analysis: Socio-cultural, Technological, Economic, Ecological, and Regulatory factors). Includes company vision, mission, goals and objectives, in order to plan three to five years into the future.
  • Operational planning: With a focus on short-term actions, this type of planning usually results in a detailed annual work plan, of which the business plan contains only the highlights.
  • Financial planning: The numerical results of strategic and operational planning are shown in budgets and projected financial statements; these are always included in the business plan in their entirety.
  • Feasibility study: Before you decide to start a business or add something new to an existing business, you should perform an analysis of its strengths, weaknesses, opportunities, and threats (SWOT analysis), as well as its financial feasibility, then asses its potential sales volume.

The process of business planning does not end when the written plan is complete. Business planning is a cycle, which includes the following steps:

  1. Put your plan of action in writing.
  2. Make decisions and take action based upon the plan.
  3. Gauge the results of those actions against your expectations.
  4. Explore the differences, whether positive or negative, and write it all down.
  5. Modify your business plan based upon what you learned.

President of Palo Alto Software, Inc. and business planning coach Tim Berry says, “Planning isn’t complete unless you’ve planned for review.” Review is the fundamental action that initiates putting your business plan into action. In his blog at Entrepreneur.com, Berry lists some insightful strategies to making good use of your plan review, a few of which include keeping the review meetings as brief as possible and an emphasis on metrics as key to effective review.

Write your business plan in sessions. Don’t think that you have to produce a business plan before go to bed tonight or you won’t be able to open your doors for business tomorrow. I like Tim Berry’s Plan-As-You-Go method of business planning. The practice of planning is an effective way to really get to know your business and you might end up discovering some important things about your company and about yourself.

There are various strategies and outlines available that will guide you in choosing the appropriate format for your business plan. Check out the collection of sample business plans for a variety of businesses at Bplans dot com. Every business is different, therefore every business plan will be structured differently, but for the purposes of this white paper, I will present the fundamental elements that make up strategic, operational, and financial planning. Here is a basic outline, thanks to NxLevel® for Entrepreneurs (2005, Fourth Edition):

General Business Plan Outline
Cover Page
Table of Contents
Executive Summary

Mission, Goals and Objectives

General Description of the Business
Stage of Development
General Growth Plan Description
Mission Statement
Goals and Objectives

Background Information

The Industry
Background Industry Information
Current/Future Industry Trends
The Business Fit in the Industry

Organizational Matters

Business Structure, Management and Personnel
Management
Personnel
Outside Services/Advisors
Risk Management
Operating Controls
Recordkeeping Functions
Other Operational Controls

The Marketing Plan

Products/Services
Products/Services Description
Features/Benefits
Life Cycles/Seasonality
Growth Description (Future Products/Services)
The Market Analysis
Customer Analysis
Competitive Analysis
Market Potential
Current Trade Area Description
Market Size and Trends
Sales Volume Potential (Current and Growth)
Marketing Strategies
Location/Distribution
Price/Quality Relationship
Promotional Strategies
Packaging
Public Relations
Advertising
Customer Service

The Financial Plan

Financial Worksheets
Salaries/Wages & Benefits
Outside Services
Insurance
Advertising Budget
Occupancy Expense
Sales Forecasts
Cost of Projected Product Units
Fixed Assets
Growth (or Start-Up) Expenses
Miscellaneous Expenses
Cash Flow Projections
Break-Even Analysis
Monthly Cash Flow Projections – First Year
Notes to Cash Flow Projections (Assumptions)
Annual Cash Flow Projections – Years Two and Three
Financial Statements
Projected Income Statement
Balance Sheet
Statement of Owner’s Equity
Additional Financial Information
Summary of Financial Needs
Existing Debt
Personal Financial Statement

Appendix Section

Action Log
Supporting Documents (Resumes, Research Citations, etc.)

Executive Summary

A business plan starts with an executive summary, which is a one or two page summary of your business plan, or an introduction to your business. Although this section is at the beginning of the business plan, it is the last thing to be written. You’ll be able to condense your business plan more succinctly once you have the opportunity to work through the other parts of the plan. The executive summary may be the only thing a potential investor or financier will read, so write it last because it has to be the most compelling.

Start by writing a description of your business, including what stage of development it is currently in (conception, start-up, first year, mature, exit) and your plans for growth. Discuss the nature of your business, the main products and services you offer, the market for your products and services, and how and by whom the business is operated.

Mission Statement

Then work on your mission statement. Here is where you concisely state the focus, scope and hope of your business (or values, vision, philosophy, and purpose). What is the customer pain you are soothing, the need you fulfill? Here’s an example from Coca-Cola:

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.

  • To refresh the world…
  • To inspire moments of optimism and happiness…
  • To create value and make a difference.

PepsiCo has a different take:

Our mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

This is the mission statement of Inspiration Software, Inc.:

Our company strives to support improvements in education and business and to make a positive difference in our users’ lives by providing software tools that help people of all ages use visual thinking and visual learning to achieve academic, professional and personal goals.

Goals and Objectives

Next, outline your company goals and objectives, including long-term and short-term goals. You will get into more detail on how the goals will be accomplished in your operational plan and annual work plan, so focus on brevity at this stage. There is a difference between goals and objectives and it’s important to know what that is. I like how Andrew Smith explains it in The Business Plan Blog. Objectives are non-emotional, precise descriptions of what is needed to achieve a goal. Goals can involve emotion and don’t have to be as specific as objectives. Objectives are the steps to actualizing the goal. Here’s an example:

Goal:

To increase revenues by 50% by the end of the year.

Objectives:

Add a new product to our line.
Expand marketing outside of local area.
Develop a new customer retention strategy.

Of course, you will need a plan of strategies in order to accomplish each objective, but those details will be expounded upon in your annual work plan. A list of three short-term and three long-term goals, along with the objectives necessary to achieve them, is sufficient for most business plans. Remember to replace the goals and objectives with new ones as you check them off your list.

Background Information

The section that details the background information should start with identifying the industry your business is in. Even if you are not a member or have no intention of becoming involved, you should list any trade associations within that industry; you never know when you made need those connections. Find out what publications, magazines or journals are available to businesses in your industry. Use these and other sources of business information to identify how past trends (economic, social, political) affected the industry, as well as any current or future trends that may have an impact.

How does your business fit in the industry? What is the history of your business, including who started it, what changes have occurred, when was it started, where was and is it located, how was it started and operated, and why it was started? What barriers to entry, if any, have you recognized?

Organizational Matters

The ownership hierarchy of your business, the management structure, and the personnel are described in the section on organizational matters. This part of the plan deals with who, what and how your business runs. Who is in charge of what and how are they qualified? Discuss how the various parts of your business interact together; include details about outside contractors and consultants and what functions they perform. See the example below, thanks to Edraw Soft Vector-Based Graphic Design.

The organizational section of the business plan also needs to include an explanation of your record keeping process, checks and balances, and control management systems. Anyone who reads your business plan should be able to understand the organizational procedures for running your business day-to-day, as well as in an emergency situation.

The risk management plan needs to be fleshed out in the organizational section as well, including your risk strategy, the different types of insurance required, your contingency plans, and problem-solving protocols. What will you do if a natural disaster ruins part of your inventory? How will you handle the sudden illness or long-term absence of a key manager? What happens if you are unable to finish a project on schedule? What are some early warning signs to watch for?

It may not be pleasant to imagine all the “what ifs,” but doing it now and planning for those unexpected events will improve your company’s chances of surviving a storm. For an excellent step-by-step guide on the details of developing a risk management plan, see the article “How to Develop a Risk Management Plan,” by Charles Tremper at wikiHow.com.

Marketing Plan

The next section, themarketing plan, gets into the details of what your business offers and what market it serves. Marketing is the communication of how your products and services “ease customer pain.” Show the problem and how your business solves it. Marketing is a necessity for every business because once your doors are open, you must invite customers to come in. Everything you do in your business that affects customers is marketing because it sends a message about your company.

This part of the plan details the features and benefits of your products and services, their seasonality and life cycle, as well as any future products and services you are planning. It also includes a thorough market analysis, in which you will study your customers, your competition and the market itself. Here you should include a PEST analysis, in which you will consider the impact of various factors upon your business. The factors include combinations of the following, depending upon your business: social, technological, economic, environmental, political, legal, ethical, and demographic.

Studying your market will give you insight as to how you can make your business more appealing to people. Market research is more than just noticing trends in your customers’ buying habits; it’s discovering what motivates your customer to buy. Don’t assume that you already know because you’ve been in this business for years. This study often unearths characteristics about your market that are hidden or new. It’s best to discover these things before your competition.

Another key element to the marketing section of your business plan is an outline of your marketing objectives, strategies, and tactics. Writing down the avenues you travel in order to market your business will afford you the opportunity to record what worked and what didn’t work. You must be able to measure and calculate the results of your marketing efforts, otherwise, what’s the point? If you don’t know if something is working for or against you, then it’s working against you.

Include details about all of the following that are applicable to your business in the marketing section of your plan: location and distribution, and promotional strategies, such as packaging, public relations, advertising, and customer service. As a result of exploring these areas, you will naturally need to consider how much you will budget for your marketing efforts. This question is closely connected to your sales forecast, which leads us into the next section of the business plan.

Financial Plan

The financial plan consists of four sections: Financial Worksheets, Cash Flow Projections, Financial Statements, and Additional Financial Information. All of these components will tell the story of how you plan to start or grow your business from a financial perspective. It is vital that you explain the assumptions under which you have based your projections, for example, “We assume that there are no unforeseen changes in economic policy to make our products and service immediately obsolete.” or “We assume interest rates will stay the same over the next three years.” (both quotes from Bplans.com sample business plans)

I suggest that you construct easy to read tables and graphs for the financial portion of the plan. The worksheets suggested are: Salaries/Wages and Benefits, Outside Services, Insurance, Advertising Budget, Occupancy Expense, Sales Forecasts, Cost of Projected Product Units, Fixed Assets, Growth (or Start-Up) Expenses, and Miscellaneous Expenses. You may find some of the worksheet templates at PlanWare.org to be useful.

The expected revenues and expenses for at least a year should be projected in the cash flow section of the Financial Plan. It’s better to make conservative predictions rather than be too optimistic when it comes to cash flows. As part of this section, a break-even analysis is essential. This is the “amount of units sold or sales dollars necessary to recover all expenses associated with generating these sales.” (NxLevel for Entrepreneurs, 2005) The formula for calculating the break-even quantity is Total Fixed Costs/(Price – Average Variable Costs).

The financial statements section should show the way things are now if you have an existing business, as well as a forward look at your checking account, or projected income statement. The only way a start-up company can provide an income statement and balance sheet is by projecting these figures based upon well defined assumptions. Both start-ups and existing businesses should include a statement of owner’s equity.

An income statement shows revenues minus expenses, in order to calculate net income or net loss. Start-ups should project these expected results for the first twelve months of business, then quarterly for the next two years. A list of a company’s assets (what you own), liabilities (what you owe), and net worth (assets minus liabilities) is called a balance sheet. The statement of owner’s equity shows the owner’s initial investment, additional investments, and retained earnings, minus owner withdrawals.

The additional financial information at the end of this part of the plan should give a summary of your business’s financial needs in order to grow, show its debt position, and state the owner’s financial status.

Appendix

In the appendix, which is the final section, an action plan or timeline for implementing the business plan should be presented. This is where the detailed goals and objectives are expanded in a work plan. Also, include in this section any additional information or supporting documents that are relevant to your business plan, such as important research, marketing materials, product specifications, and owner and employee résumés.

Executive Summary

Now that you have written the hard part of your business plan, it’s time to write the fun part, the executive summary. As mentioned in the beginning of this white paper, this is the most important piece of the business plan because it illustrates the very essence of your business in a captivating and condensed form. If you ever share your business plan with a potential investor or potential buyer, the executive summary may be the only thing that is read.

Make the executive summary brief (no more than two pages), but make sure you showcase the best qualities of your business without glossing over important information; show why yours is a winning business. Write one to three sentences about each of the following:

  • General description of the business
  • Mission statement
  • Management structure
  • Business operations
  • Products/services, the market and your customer
  • Your marketing plan, including the competition
  • Financial projections and plans

A clear, concise, and convincing executive summary will intrigue your audience and inspire them to read the rest of your plan. If the plan is never seen by anyone outside of your business, don’t assume it was a waste of time. During the planning process, you will have worked through an enlightening exercise that prepares you to run and grow a better business.

Having this written document available for frequent consultation and review will improve your chances of not only surviving, but coming out strong on the other side of this recession. Most people think that knowing in the back of their mind what they plan to do is sufficient for survival or recovery, but the difference between a written plan and an idea is usually the difference between failure and success.