by Ken Sethney, Kitsap SCORE
Writing a business plan is one of the important steps an entrepreneur needs to take before launching a new business. There is no shortage of people who feel that writing a business plan is an intimidating task. However, many business owners are likely to agree that their plan played a major role in their ability to launch and grow a profitable business.
A business plan isn’t about the document itself, it’s about the discovery process you use to create it.
Business plans can be tackled in a number of different ways, but all should go after the same result – to clearly demonstrate the viability of your business to generate revenue and turn a profit. Your plan needs to state the business case for the business itself, discuss marketplace, financials, SWOT analysis, and much more. It’s a lot to think about.
Too often owners decide to jump right in rather than take the time to properly plan. The benefits of planning – and the investment in the time it takes to write the plan – are invaluable in the end. Thinking through your start-up costs and revenue projections ahead of time, for example, will help you make the types of decisions that could be the difference between your business losing money or generating a profit.
When you’re ready to start your business plan, create manageable goals and hold yourself accountable for meeting deadlines.
The easiest way to get started is to create a task list with manageable goals and deadlines. Here are some tips to make writing a business plan less intimidating and easier to accomplish.
When you own a small business, you have deadlines to meet, customers to serve, orders to fill, and a million other things to do. Finding time to work on your business and manage your financials can feel overwhelming when you are knee-deep in day-to-day operations.
Managing your finances doesn’t mean drowning in spreadsheets.
Taking time to manage your finances is an important part of what it takes to run a profitable business. At a minimum, there are three basic financial documents that you can’t ignore — your balance sheet, profit and loss statement, and cash flow statement. By keeping these three documents up-to-date and within reach, you will always have a strong sense of the financial health of your company.
According to SCORE mentor and retired CPA Frank Curtis, “These financial statements are the keys to understanding any business. In a very precise way, you can determine if your business is growing and succeeding or failing.”
Balance Sheet: Your balance sheet is a snapshot of your business’ financials at any given moment and shows you if you’re in the red or the black. This financial statement lists your business’ assets, liabilities and equity. These elements together give you your company’s net worth.
Profit and Loss Statement: Your profit and loss statement, or P&L, is your income statement. A P&L summarizes your income and expenses during a period of time — usually by fiscal quarter and year. This is the financial statement you will use to understand how your revenues and costs impact your profitability.
Cash Flow Statement: Your cash flow statement shows your sources of incoming and outgoing cash over a period of time. Cash flow documents are helpful when assessing performance trends and other aspects of your business that wouldn’t be as evident if you were evaluating your business only on the basis of the balance sheet or P&L.
by Ken Sethney, Kitsap SCORE
You’ve seen people so absorbed with their smartphones that they appear oblivious to what’s going on around them. True, everyone is entitled to a bit of privacy, and perhaps that message or video is really, really important. However, spending too much time in a “heads-down” mode can be off-putting and, sometimes dangerous.
Many entrepreneurs, particularly those who work from home, operate their small businesses much the same way when they rely too heavily on email to communicate with clients. Email is convenient, particularly for work related issues and updates, but numerous studies have come to the same conclusion — customers want to be treated as people, not as return email addresses.
When you take a technology-centric approach to communication, you’re missing an opportunity to build a relationship with your customers. Don’t you think they would rather do business with someone they know? Wouldn’t you?
by Ken Sethney, Kitsap SCORE
Marketing a niche product means that you’re not selling to everyone. You are focused on a group of people who are most likely to buy your products or services.
Having a narrow pool of potential customers comes with challenges and ultimately means more work on your part to find those people who fall within your niche. However, marketing a niche product also has advantages once you identify your customers.
Successfully marketing a niche product starts with an in-depth understanding of your potential customer’s wants and needs.
When you are targeting a small group of buyers, you need to understand who is most likely to buy your product and how your product can provide solutions to their needs.
Start with a bit of market research. Google can help you find lots of useful information. You can also visit the Kitsap Regional Library and speak to an adult services librarian. The library website can give you access to valuable information.
from the office of WA Govenor, Jay Inslee
On June 30 Washington state reopened under the Washington Ready
plan. All industry sectors previously covered by the Roadmap to Recovery or the Safe Start plan (with the limited exceptions noted below) may return to usual capacity and operations.
Important Reference Documents
Healthy Washington Requirements
For governing bodies of public agencies opting to host in-person public meetings under the Open Public Meetings Act, as permitted under Emergency Proclamation 20-28, et seq., the miscellaneous venues guidance remains in effect.
Newly-opened Small Business Flex Fund program offers low-interest loans to small businesses and nonprofits
The Washington State Department of Commerce this week launched a new Small Business Flex Fund. The Fund is a public-private partnership aimed at helping small businesses and nonprofits – particularly those in low-income communities – recover and grow as communities reopen for business. Gov. Jay Inslee in November 2020 approved a foundational investment of $30 million for Commerce to create a recovery loan program. Commerce is partnering with several financial institutions and community-based organizations to lend $100 million or more to small businesses and nonprofits with fewer than 50 employees and annual revenues of less than $3 million.
Qualifying businesses and nonprofits can apply for loans up to $150,000. Loans are available in 60- or 72-month loan terms at interest rates between 3-4.5%. The Fund works with and through local Community Development Financial Institutions (CDFIs), which serve under resourced communities and underbanked businesses the Small Business Flex Fund aims to help. Interested applicants pre-apply on the Flex Fund’s online portal and, if they qualify, will be matched with a lender. Once matched, the participating lender will assist the business owner throughout the application process and provide additional advisory support. If a business doesn’t qualify, they will be connected to a trusted community organization that can assist with finding other resources. For more information and to apply, visit smallbusinessflexfund.org.
Manage Your Expectations
by Kelly Deis of SoundPoint Consulting
Most business owners do not have a realistic idea of what their businesses are worth. Owners almost always think that their business is worth quite a bit more than the market would likely bear. There are several reasons for this.
1. Emotional Ties: Owners are personally and psychologically tied to their business. This is particularly true for long-running family businesses.
An owner has poured their heart and soul into their business. Where others may see a mundane business, owners – like proud parents, see their business as an apple of their eye. This emotional tie may cause a disconnect with the realities of the market.
2. Lack of Analytics: Most small business owners do not have a grounding in the analytics which determine a company’s value.
Sadly, I have run across several owners who negotiated a purchase price for their businesses with their gut, and ultimately overpaid. Now, they are hoping this is the baseline for the current valuation. Not surprisingly, this is not a criterion for prospective buyers. Most buyers value a business based on its cash flow. The original purchase price rarely – if ever, is a factor.