TK Talks about Small Business and Innovation on Forbes

Bill Gates on Philanthropy During a Recession

Happy Holidays

DB18.com | Happy Holidays | Forward this Picture

Planning Less Daunting, Let's Call It Something Else

We need new vocabulary for business planning. Just don't call it a 'business plan.'

What typically comes to mind when you read or hear the phrase “business plan”?

For many people, the mental image is a big boring formal document. It’s like a high-school term paper or a university thesis, a daunting task to be finished with a huge sigh of relief, then stored away in a drawer and quickly forgotten.

That’s why many young people say, “Don’t bother to plan.” And if you ask successful entrepreneurs whether they had a business plan to start, many will say they didn’t simply because it’s cool to say no. It’s sort of like asking people whether they studied in high school.

But probe further, and you’ll find that many people who suggest bypassing a business plan will recommend that you set strategy, goals and priorities and follow up with frequent course corrections. Which, of course, is business planning. It just doesn’t sound like the popular image of a business plan.

Smart entrepreneurs develop a streamlined plan—straight to the point, but built to be managed and changed. Form should follow function. If you don’t need to show a document to investors, bankers or other outsiders, why even bother to print anything out? Keep the plan simple and easy to deal with—an electronic PDF that you review and revise at least once a month. It should set forth your strategic focus, target market and point of differentiation, as well as specific steps to implement your strategy, including assumptions, tasks, milestones, responsibilities, dates, deadlines and key measurements.

Now that we’ve laid out what to do, we ought to find a better way to refer to the planning needed to start, run and expand a business. Should we call it “business management” maybe? Or even better, how about “Steering the business”? I’ve asked about this wording problem on Twitter and in my blog, but I’m afraid nobody has come up with a suggestion that grabs me.

I have been playing off a post on Amex OPEN forum by Ivana Taylor, under the title, A New And Improved Goal Setting Process For Your Business (And Life). She’s writing about business planning, and I think she gets it right with the idea of establishing goals. So instead of “business planning,” maybe “goal management”? Or “goal keeping”?

SOURCE: http://www.entrepreneur.com/article/222369

10 Intriguing Business Books for Entrepreneurs to Read on Vacation

As the year winds down, one thing isn't growing shorter -- my nightstand pile of noteworthy business books.
I receive mountains of them, and most become instant library donations. But the ones that intrigue me keep hanging around, mocking my lack of free time. Eventually, I get to read them.
I hoped to do a post about each of these, but given that soon it will be time to talk about the hot business books of 2012, I thought I'd present my list of the business books I considered "keepers" this year. This is a highly individual list -- several of these are by people I've met, so that may have influenced my thinking.
This is not a best-of or a ranking -- these are listed alphabetically:

1. Become a Franchise Owner! by Joel Libava. I know the "Franchise King," and I can't wait to read this one. Despite the upbeat-sounding title, Joel is known for his very frank opinions on franchise best practices. The book cuts the bull and helps would-be franchisees spot the problems as well as the opportunities. A must for anyone contemplating a franchise purchase.
    
2. Business at the Speed of Now by John Bernard. The founder of consulting firm Mass Ingenuity discusses how to empower your people to deal with customers' rising expectations in the always-on era.
    
3. Enchantment by Guy Kawasaki. It's pretty much all about how to influence customers in an ethical way. A key read, especially if you want to win in online sales.
    
4. EntreLeadership by Dave Ramsey. The famed money-management guru takes on leadership, boiling down his 20 years of experience and tells you how to lead your team to glory.
    
5. The Entrepreneur Equation by Carol Roth. Are you cut out to be an entrepreneur? No, really, are you? Roth dares to suggest that not everybody has what it takes, and explains the traits required to make it as a business owner.
    
6. Evil Plans by Hugh MacLeod. Combine your capacity to work with your capacity to love -- all while enjoying MacLeod's fun cartoons.
    
7. The Method Method by Eric Ryan, Lucas Conley and Adam Lowry. I got to know the ecological cleaning-products company Method a while back when I interviewed them for a story. This one's for every entrepreneur who would like to crack a long-established category and bring a new twist to it.
    
8. Share, Retweet, Repeat by John Hlinko. Want to know how you get a horde of people to a Facebook page? Hlinko's book has some enlightening anecdotes from his time as a political promoter.
    
9. The Thank You Economy by Gary Vaynerchuk. The Wine Library TV phenom shows where the return on investment is in social media -- and offers case studies to back it up.
    
10. Uncertainty by Jonathan Fields. I had a chance to hear Jonathan speak at SOBCon Northwest this year. His exploration of how successful leaders move forward despite their fears is fascinating -- and inspiring.

What business books have you picked up (and read!) this year? Leave a comment and add to my list.

SOURCE: http://www.entrepreneur.com/blog/222423

Estimating Realistic Startup Costs

Businesses spend money before they ever open their doors. Start-up expenses are those expenses incurred before the business is running. Many people underestimate start-up costs and start their business in a haphazard, unplanned way. This can work… but is usually a harder way to do it. Customers are wary of brand new businesses with makeshift logistics.

Use a start-up worksheet to plan your initial financing. You’ll need this information to set up initial business balances and to estimate startup expenses. Don’t underestimate costs.

• Startup expenses. These are expenses that happen before the beginning of the plan, before the first month. For example, many new companies incur expenses for legal work, logo design, brochures, site selection and improvements, and other expenses.
• Start-up assets. Typical start-up assets are cash (the money in the bank when the company starts), and in many cases starting inventory. Other starting assets are both current and long-term, such as equipment, office furniture, machinery, etc.
• Start-up financing. This includes both capital investment and loans. The only investment amounts or loan amounts that belong in the Start-up table are those that happen before the beginning of the plan. Whatever happens during or after the first month should go instead into the Cash Flow table, which will automatically adjust the Balance Sheet.

Timing is everything
Some people are confused by the specific definition of start-up expenses, start-up assets, and start-up financing. They would prefer to have a broader, more generic definition that includes, say, expenses incurred during the first year, or the first few months, of the plan. Unfortunately this would also lead to double counting of expenses and non standard financial statements. All the expenses incurred during the first year have to appear in the Profit and Loss statement of the first year, and all expenses incurred before that have to appear as start-up expenses.

Don’t count expenses twice: they go in Start-up or Profit and Loss, but not both. The only difference is timing. Don’t buy assets twice: they go into the Start-up if you acquire them before the starting date. Otherwise, put them in the Profit and Loss.

Expenses vs. assets
Many people can be confused by the accounting distinction between expenses and assets. For example, they’d like to record research and development as assets instead of expenses, because those expenses create intellectual property. However, standard accounting and taxation law are both strict on the distinction:

• Expenses are deductible against income, so they reduce taxable income.
• Assets are not deductible against income.

What a company spends to acquire assets is not deductible against income. For example, money spent on inventory is not deductible as expense. Only when the inventory is sold, and therefore becomes cost of goods sold or cost of sales, does it reduce income.

Generally companies want to maximize deductions against income as expenses, not assets, because this minimizes the tax burden. With that in mind, seasoned business owners and accountants will always want to account for money spent on development as expenses, not assets. This is generally much better than accounting for this expenditure as buying assets, such as patents or product rights. Assets look better on the books than expenses, but there is rarely any clear and obvious correlation between money spent on research and development and market value of intellectual property. Companies that account for development as generating assets can often end up with vastly overstated assets, and questionable financials statements.

Another common misconception involves expensed equipment. The U.S. Internal Revenue Service allows a limited amount of office equipment purchases to be called expenses, not purchase of assets. You should check with your accountant to find out the current limits of this rule. As a result, expensed equipment is taking advantage of the allowance. After your company has used up the allowance, then additional purchases have to go into assets, not expenses. This treatment also indicates the general preference for expenses over assets, when you have a choice.

Why you don’t want to capitalize expenses
Sometimes people want to treat expenses as assets. Ironically, that’s usually a bad idea, for several reasons:

• Money spent buying assets isn’t tax deductible. Money spent on expenses is deductible.
• Capitalizing expenses creates the danger of overstating assets.
• If you capitalized the expense, it appears on your books as an asset. Having useless assets on the accounting books is not a good thing.

Types of start-up financing

• Investment is you or someone else puts in the company. It ends up as Paid-in Capital in the Balance Sheet. This is the classic concept of business investment, taking ownership in a company, risking money in the hope of gaining money later.
• Accounts payable are debts that will end up as Accounts Payable in the Balance Sheet. Generally this means credit-card debt. This number becomes the starting balance of your Balance Sheet.
• Current borrowing is standard debt, borrowing from banks, Small Business Administration, or other current borrowing.
• Other current liabilities are additional liabilities that don’t have interest charges. This is where you put loans from founders, family members, or friends. We aren’t recommending interest-free loans for financing, by the way, but when they happen, this is where they go.
• Long-term liabilities are long-term debt, long-term loans.

Expect a Loss at Start-up
The loss at start-up is very common…at this point in the life of the company, you’ve already incurred tax-deductible expenses, but you don’t have sales yet. So you have a loss. Don’t be surprised; it’s normal.

Cash Balance on Starting Date
Cash requirements is an estimate of how much money your start-up company needs to have in its checking account when it starts. In general, your Cash Balance on Starting Date is the money you raised as investments or loans minus the cash you spend on expenses and assets. As you build your plan, watch your cash flow projections. If your cash balance drops below zero then you need to increase your financing or reduce expenses. Many entrepreneurs decide they want to raise more cash than they need so they’ll have money left over for contingencies.

However, although that makes good sense when you can do it, it is hard to explain that to investors. The outside investors don’t want to give you more money than you need, for obvious reasons—its their money!

SOURCE:  http://articles.bplans.com/starting-a-business/estimating-realistic-start-up-costs/62

What is Ethics? What is Business Ethics? - Markkula Center for Applied ...

Know Your Industry Before You Start Your Business

by Tim Berry

You need to explain the type of business you’re in. You’ll be expected to explain the general state of your industry and the nature of the business, especially if your plan is going outside your company to banks or investors.

Whether you’re a service business, manufacturer, retailer, or some other type of business, you should do an Industry Analysis, describing:

• Industry Participants.
• Distribution Patterns.
• Competition and Buying Patterns.

Industry analysis
Everything in your industry that happens outside of your business will affect your company. The more you know about your industry the more advantage and protection you will have.

A complete business plan discusses general industry economics, participants, distribution patterns, factors in the competition, and whatever else describes the nature of this business to outsiders.

The Internet has had an enormous impact on the state of business information. Finding information isn’t really the problem any more, after the information explosion and the huge growth in the Internet beginning in the 1990s and continuing in the 21st Century. Even 10 or 15 years ago, dealing with information was more a problem of sorting through it all than of finding raw data. That generality is more true every day. There are Web sites for business analysis, financial statistics, demographics, trade associations, and just about everything you’ll need for a complete business plan.

Industry participants
You should know who else sells in your market. You can’t easily describe a type of business without describing the nature of the participants. There is a huge difference, for example, between an industry like broadband television services, in which there are only a few huge companies in any one country, and one like dry cleaning, in which there are tens of thousands of smaller participants.

This can make a big difference to a business and a business plan. The restaurant industry, for example, is what we call “pulverized,” which, like the dry cleaning industry, is made up of many small participants. The fast food business, on the other hand, is composed of a few national brands participating in thousands of branded outlets, many of them franchised.

Economists talk of consolidation in an industry as a time when many small participants tend to disappear and a few large players emerge. In accounting, for example, there are a few large international firms whose names are well known and tens of thousands of smaller firms. The automobile business is composed of a few national brands participating in thousands of branded dealerships. In computer manufacturing, for example, there are a few large international firms whose names are well known, and thousands of smaller firms.

Distribution patterns
Products and services can follow many paths between suppliers and users. Explain how distribution works in your industry. Is this an industry in which retailers are supported by regional distributors, as is the case for computer products, magazines, or auto parts? Does your industry depend on direct sales to large industrial customers? Do manufacturers support their own direct sales forces, or do they work with product representatives?

Some products are almost always sold through retail stores to consumers, and sometimes these are distributed by distribution companies that buy from manufacturers. In other cases, the products are sold directly from manufacturers to stores. Some products are sold directly from the manufacturer to the final consumer through mail campaigns, national advertising, or other promotional means.

In many product categories there are several alternatives, and distribution choices are strategic. Encyclopedias and vacuum cleaners are traditionally sold door-to-door, but are also sold in stores and direct from manufacturer to consumer through radio and television ads.

Many products are distributed through direct business-to-business sales, and in long-term contracts such as the ones between car manufacturers and their suppliers of parts, materials, and components. In some industries companies use representatives, agents, or commissioned salespeople.

Technology can change the patterns of distribution in an industry or product category. The Internet, for example, is changing the options for software distribution, books, music, and other products. Cable communication is changing the options for distributing video products and video games.

Distribution patterns may not be as critical to most service companies, because distribution is normally about physical distribution of specific physical products such as a restaurant, graphic artist, professional services practice, or architect.

For a few services, distribution may still be relevant. A phone service or cable provider, or an Internet provider, might describe distribution related to physical infrastructure. Some publishers may prefer to treat their business as a service rather than a manufacturing company, and in that case distribution may also be relevant.

Competition and buying patterns
It is essential to understand the nature of competition in your market. This is still in the general area of describing the industry, or type of business. Explain the general nature of competition in this business, and how the customers seem to choose one provider over another. What are the keys to success? What buying factors make the most difference–Price? Product features? Service? Support? Training? Software? Delivery dates? Are brand names important?

In the computer business, for example, competition might depend on reputation and trends in one part of the market, and on channels of distribution and advertising in another. In many business-to-business industries, the nature of competition depends on direct selling, because channels are impractical. Price is vital in products competing with each other on retail shelves, but delivery and reliability might be much more important for materials used by manufacturers in volume, for which a shortage can affect an entire production line.

In the restaurant business, for example, competition might depend on reputation and trends in one part of the market, and on location and parking in another.

In many professional service practices the nature of competition depends on word of mouth, because advertising is not completely accepted. Is there price competition between accountants, doctors, and lawyers? How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why choose Starbucks, a national brand, over the local coffee house? All of this is the nature of competition.

Main competitors
Do a very complete analysis of your main competitors. List the main competitors. What are the strengths and weaknesses of each? Consider their products, pricing, reputation, management, financial position, channels of distribution, brand awareness, business development, technology, or other factors that you feel are important. In what segments of the market do they operate? What seems to be their strategy? How much do they impact your products, and what threats and opportunities do they represent?

SOURCE: http://articles.bplans.com/starting-a-business/know-your-industry-before-you-start-your-business/72

LivePlan: Easy Business Plans Online

Bedaya - Entrepreneurship and Career Development

Bedaya - Entrepreneurship and Career Development from ThinkBigQatar on Vimeo.

Entrepreneurship 101 2008/09 - Basics of Marketing for Entrepreneurs, Pt. 2

Entrepreneurship 101 2008/09 - Basics of Marketing for Entrepreneurs, Pt. 2 from MaRS Discovery District on Vimeo.

Search program

Search program