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Plenty of Revenue- Not much Profit

Posted by Lucy Sanders on

When an entrepreneur is working flat out and a lot of cash is passing through the till, it feels like the business is going really well.  Cash is not profit and working hard may not be working smart.  It is important for the small business owner to have a good grasp of the bigger picture in order to prioritize the spending of money and time. This is where a solid business plan comes in.

In all of the day to day chaos of running a small business, it is hard to find time to sit down and look at the financials.  Yet if you do not make time to do it, you could be in for a bit of a shock come year end.  Especially in businesses that deal with a lot of cash such as restaurants, it is common to feel like the business is profitable, when in fact it may be losing money.  Cash flows in and out of a business.  The owner buys supplies and labour, then turns them into goods and services.  Customers in turn buy the goods and services and the owner buys more supplies – but what about overhead?  Look up; those lights cost money to run, that roof requires rent. The garbage collection costs money too, and don’t ever forget the tax man.

How can an entrepreneur know if they will have enough to cover all of these costs?  How will they know how much to charge and what they can afford to pay their staff?  How will they know when it is okay to quit their “day job”? The business plan.

When you write a comprehensive business plan before you beging, you have something to measure your performance against.  Not as busy as you thought you’d be?  Go back to the plan and try again with lower sales figures.  This will show you where you need to cut.  Is one item in your inventory selling out quickly, but you are still not making much money from it?  Go back to the pricing section on your plan and readjust your pricing to increase your margins.   A business plan is not written in stone and life rarely goes according to plan, but once you have it written, you have a useful tool with which to guide your business to profitability.

What are some of the ways in which you have modified your business plan as time has passed?  What do you use as your profitability yardstick?

My Blog

Why I Hate Business Plan Templates

Posted by Lucy Sanders on

Everyone says you need a business plan before you launch a new company. You definitely need one if you require financing of any kind. Chances are that if you’re writing your own business plan, you’re working your way through a business plan template.

And the template probably looks something like this one from the US-based resource, SCORE.

SCORE’s template is a good one. It’s also typical. Business plan templates tend to treat each section of the plan as independent from the rest, but that’s never actually the case. Have you ever seen a small business with a Marketing department that never spoke to anyone in Finance? Every part of a business is integrated with the rest. And the business plan is no different. You write some Business Overview, and then you update your Marketing Strategy, which reminds you to look again at your Competition, and that helps you determine Pricing for the Financial Projections. While working on that, you realize your Marketing budget is too high, so you go back and revisit the Marketing Plan again.

You don’t run a business by doing the same things in the same order every day. And you can’t write a business plan in order, either.

Templates bug me, which is why I created a business plan writing guide. They aren’t solutions to the frustrations entrepreneurs face when they are trying to get from ‘idea’ to ‘open’. They are just starting points. Templates don’t help you think like a business owner; they assume that you already do.

Have you found a business plan template that you like? Let us know in the comments.

My Blog

Pitching your business to investors? Stop thinking about yourself.

Posted by Lucy Sanders on

This is a guest post by Linda DeLuca

Want to stand head and shoulders above other presenters? Want the investors to remember you? Want to have impact?

Then do one thing different from all others pitching ideas: Focus on the investors.

The best way to turn your brilliant business plan into a winning presentation is to focus on your audience first, then on your message. Will it take extra work? Yes. Will it make a difference? Most definitely.

Before you begin developing your presentation, you must know the expectations of your audience. Understanding the questions investors will ask will bring you one step ahead of others.

But if you want to really be memorable, get to know the specific investors – the very ones you will be pitching. That will give you the edge other entrepreneurs won’t have.

First, identify the players.
Find out who will be at the meeting. How do you find out? Ask.

Second, get to know them.
Google them, interview them, interview others who have pitched to them. What do you want to find out?

  • What questions do they ask?
  • What are they passionate about?
  • What is their biggest concern?
  • What pitches have been approved? Denied? Why?

Third, customize your pitch.
Craft your pitch to answer their questions while creating a story that will resonate with them.

Make your solution interesting and important to the investors, not just interesting to you.

To have impact and be memorable you must prepare. Preparing for a specific audience (your potential investors) is one secret of a master presenter.

How do you get to know your audience before you present?

My Blog

Build A Blog That Rocks Their Socks Off

Posted by Lucy Sanders on

If you’re starting a business, it’s the perfect time to start a blog.

If you want to create a blog that attracts a growing audience, builds a relationship with your readers — and provides *you* with enough enjoyment to maintain it over the long term — you’ll need to start with a focused plan for success.

Consider Your Blog Parameters: What’s Your Focus?

With millions of blogs in existence on every subject imaginable, and likely a dozen or more competing businesses just in your own city, you’ll need to find a focus. Think about what you have to offer your readers, and how you can offer it in a way that sets your brand apart from all the other bloggers already out there.

Although it may seem counter-intuitive, how you blog for a massive audience is to write for the few. Think you’ve narrowed your focus too much? Now narrow it a bit more by writing for your audience in a way that no one else does. You’ll gain a loyal following by offering something truly unique and relevant to that core group of people who absolutely love what you do — even in the crowded blogosphere.

Make It Easy For People To Find You — And Read Your Posts

If you’re new to blogging, you may not have a lot of experience writing for the web or with search engine optimization. Take some time to learn the basics. Writing for the web is easy to learn; it’s all about using techniques that keep the reader’s needs in mind. Our post on Quick Tips To Improve Your Web Writing will help you format your posts so your readers can easily digest them.

By taking the time to learn about keywords, title tags, and meta descriptions, you’ll give search engines the information they need to correctly index your blog posts so would-be readers can find you. If SEO is all new to you, this post on making your website SEO friendly will give you a quick intro.

Include Marketing And Promotion In Your Blog Plan

Many newbie bloggers believe that by consistently writing blog posts that don’t suck they’ll attract an audience. Not so. You will need to include marketing and promotion in your blog plan if you want to attract readers.

There are many websites that offer strategies for marketing your blog. However, if you’re new to blogging I’d highly recommend signing up for Social Triggers blog updates. Why not get your blog marketing and promotion right from the get go? Derek Halpern offers incredibly valuable advice based on the psychology behind how people behave (and buy) online.

Are you ready to start a blog for your new business? We’d love to hear your ideas for building a blog that stands apart from the crowd!

My Blog

Are You as Finance-Savvy as Other Business Owners?

Posted by Lucy Sanders on

How does your financial know-how stack up against other small businesses?

Do you know what the role of a balance sheet is?

Do you know what you can do to improve your short term cash flow?

These and other questions were posed to Canadian small business owners by Intuit’s research team and the results were telling. 83% of respondents displayed only basic or below-basic financial literacy, a skill which is becoming increasingly important in an environment where only 51% of small businesses are expected to survive past their 5th year of operation. Respondents of the questionnaire cited time with an accountant, information sessions with other small business owners, and online tutorials as tools they wanted to have access to. Check out the results of the study summarized in a neat infographic below:

Although we definitely recommend working with an accountant and bookkeeper, our past experience advising clients has revealed that educating yourself is just as important. Your accountant can only do so much when your financial house is in disarray.

Fortunately, helping small businesses learn to grow and flourish is what we love to do. This is why we’ve organized From Idea to Open, a workshop designed to connect entrepreneurs with small business experts. We aim to arm attendees with the knowledge and confidence necessary to develop the company they’ve always dreamed of. Our business planning e-book also gives excellent, easily digestible advice on how to start organizing your financial life and modeling your financial projections. We are always open to answering your questions so don’t be afraid to send us a hello.

Do you have any small business questions you’d like answered? Tell us about them!