1.  The Plan describes a marketable idea.

Lenders and investors want to see proof that customers want your product or service and are willing to buy it for a price that gains you a consistent profit.

2.  The Plan must show good profit potential in a short period of time.

Because new business ventures are so risky, they are expected to earn at least a 25% annual return, and preferably more.

3.  The Plan targets a clearly defined market with enough size and purchasing power to produce a profit.

 Lenders and investors look for businesses whose target markets are clearly defined. They also prefer large markets with high growth potential, but avoid businesses that try to be “everything to everybody.”

4.  The Plan explains clearly the “competitive edge” your product or service has in the marketplace.

The more unique your product or service is, the better.   Show how you offer the customer something the competitor doesn’t or can’t.

 5.  The Plan shows the company’s ability to control both the quality of the product or service and its delivery.

Dependence upon outside contractors and sales representatives can be considered a potential weakness when quality of delivery, installation, and service of the product is primary to the company’s success.

6.  The Plan shows that managers and employees have the skills and the experience to make the company a success.

Lenders and investors don’t put their money into a business; they put it into its people.  Skilled, experienced managers and employees can make a business work even when resources are stretched thin and conditions are tough.  Lenders and investors also know that experienced managers and employees will improve their chances of getting their money back.

7.  The Business Plan idea is not overly complex.

Trying to do too much too fast—and/or having to educate the consumer about a product’s or service’s benefits–can put a company under before it can even get started.  This applies to expansion plans as well as start-ups.

8.  The Plan shows a personal investment in the business.

If you don’t believe in your own venture enough to invest at least some of your own money into it, no one else will want to either.  “Sweat equity”–unpaid personal time and hard work–can be important, but lenders and investors prefer to see an entrepreneur motivated by a substantial financial stake in the business.

Next week in our Part III conclusion, we will summarize 9-11 and answer the question:   “BUT – What if you aren’t able to secure funding?”

 Compliments of Lew West Business Consultants 

 www.lewwest.com  Blog  www.MyNext30.com

Third Party Lenders are often a good source when banks decline your loan request. When you can show you have a healthy company they are usually able to be more creative than a bank. The criteria still includes showing a history for the business, and that it is capable of making a profit.

Potential lenders or investors are keenly aware of the risk and want a return matching that risk:  the greater the risk involved in the venture, the greater the return demanded.  There are a number of factors they will take into consideration when reviewing your Business Plan, however if you have a solid plan, your chances are greatly improved.  Some of those factors will be discussed next week.

Compliments of Lew West Business Consultants 

 www.lewwest.com  Blog  www.MyNext30.com

This is what a system does for you, and your business.  It breaks things down into bite-sized pieces, which in turn gives the option to eat (or use) that bite or not. 

When you break down each piece of an action, or event, it can then be identified and defined.  Whenever you convert that action, event, or thing into small, single actions, events or things, you are able to assume control of them. The next step is putting each of those single actions, events or things into a smoothly operating order.  As a result, you have created a system, or procedure, that can be duplicated – over and over and over. 

Once each piece is identified, it can be arranged, rearranged, adjusted or completely eliminated.  Anything can be handled once it has been broken down into its individual actions, events or things. 

Do this for each function of your business and soon you will see your systems development become your pathway to a mature business and personal freedom.

A System is a Procedure that works every time in a repeatable and efficient manner.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

Look at your business as if it was a child.

Initially you must do everything for your Baby Business.  Gradually, as it starts growing, it begins doing more and more things on its own.  Being a concerned parent you establish boundaries and guidelines to ensure it plays fair and communicates with well with the others in the marketplace.  These procedural guidelines, also known as systems, become an automatic response to behaviors in the “home” (workplace) as well as in the play area of the marketplace. These fundamental guideline/systems define preferred action and reaction for Baby Business, and apply to all of the staff from the top down.

As Baby Business continues to grow, more and more systems must be put into place and kept updated.  Example: When Marketing sends a potential customer in the door, what procedures (systems) are activated for sales, customer service, processing the payment, delivery, follow-up etc.   If these systems are clearly written, consistent on-going procedures, any new caretakers (employees) can be quickly brought up to speed, as well as able to more quickly adapt to the guideline philosophy of Business. Everyone at each level of management should be comfortably knowledgeable of all aspects of the care and conduct of Business as it applies to their area of expertise.

To develop and maintain strong core philosophy, it is imperative to integrate the systems, policies, chain of command and social skills (customer service, marketing, sales, interoffice relations, etc.) from the very beginning.  If these procedures become a part of daily life with “Little Business”, it will make it much easier to survive the Terrible Twos, as well as the Pre-Teen through Teenage years. Once these values are embedded within the core, “Little Business” will mature into a self-sufficient “Big Business”.  And “Yes”, Business growth goes through all of these stages just as an offspring does. 

There is one decided advantage to raising a Business vs a Child.  If you didn’t get all of the proper systems in place along the way and you lose control, you can close the doors and walk away; free to start over with all of your freshly acquired knowledge.  (It is only failure if you didn’t learn from it.)

The purpose for all of the systems, policies and procedures is to allow “Business” to continue taking more and more responsibility and initiative. Business needs to be encouraged to grow into maturity. This will allow you to slowly start backing out of being the primary care-giver. You should gradually transition into only being an advisor during the occasional rough spots, and eventually not even that.

By this time Business will have put quality, well trained managers and employees into all of the positions.  All systems will have been well tested by time and use. These foundation systems will only need scheduled “tweaking/adjustment” to stay current with the business’s changing services, products and the ever evolving marketplace.

So when is your Business mature? 

The day you can walk out the door for as long as you like and know Business will “continue as usual” – supporting itself and you – by itself.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – http://www.mynext30.com/

 10 Things That Build Business Value!!

 1. Establish your brand in the marketplace.

 2. Develop your operations manual. Put systems into place that will let your business maintain or grow in your absence.  

3. Be vigil in keeping your books current; showing accurate, clearly identified and consistent records.  (Remember, besides it ultimately making you more successful, a potential buyer or auditor might be looking at them any day.)

 4. Expand your individual client lists, your networking sources, and especially protect your reputation. Your reputation and your company’s reputation are identified as being the same.

 5. Take care of your intellectual property: trademarks, patents, etc.

 6. If you have any outstanding tax issues, take care of them ASAP.

 7. Give a good first impression – the business should always look clean, businesslike, and attractive when anyone walks in.  Specific maintenance duties should be included in every job description, e.g. keeping trash emptied, personal items out of sight, etc.

 8. At least quarterly, review that your legal paperwork is being maintained.

9. Update your business plan weekly or monthly as well as your expected future projections.  Maintain your business plan as if a buyer might walk in the door any day with an outrageously large offer – IF you can hand it over your current business plan and books for review Right Then. 

 10. Obtain a realistic picture of the value* of your company, noting that specific actions you take with the above can increase its value. Despite all of the things you hear, there are no set formulas in determining your company’s value.

 *Determining the value of a business will depend upon several things including, but not limited to, company assets; net profits the business is showing now and in the past; feasibility of further growth or expansion of the business; location.   If the goal is to sell – the recent sold price other area businesses in that industry will need to be taken into account, but only as one variable.

 Compliments of Lew West Business Consultants
http://www.lewwest.com/   Blog – http://www.mynext30.com/

 2.  Be aware of the difference between what a client “perceives” as the product value and its “actual” value.  Once you determine the break-even cost (actual value) of your product, you have established a base price. Now you need to focus on establishing the “perceived” value of the product to the client. The client usually knows the market price range of the product, so your job is to show the client your enhanced attributes of the product.  You want your client to begin to “feel” that you are offering a product of greater value than what is on the general market.  If you have developed a strong list of benefits and advantages to serve their need, they will “perceive” your product as worth more, and will be willing to pay more for your enhanced version. These unique attributes could possibly be an improvement you’ve added, or something your competitors have failed to point out, or even showing them how to more efficiently use your product to better fill their need.

3.  Peer image often influences product purchase.  The “in thing” has a great deal of emotional appeal. Know your target market and strive for an innovative way to tap into that perceived need.

4.  Competing on price. Be sure you know what the pricing for your product, or similar product, is within the general market. If you undercut the going rate too much, not only are you undermining your own marketplace by diminishing the going price, but the backlash from your competitors might trigger a price war.  No one ever wins a price war, and the one that ultimately comes out on top will be the larger company(s) with the deepest pockets. A idea is to not open that Pandora’s box at all.

5.  Play fair.  Many times we get so involved in breaking our services into multiple “options” we lose sight of how the client may respond. Yes, many times more can be collected by doing it this way, but keep it to a minimum. No one likes to be “nickel and dimed” so be careful not to over-do the options and their escalating costs. 

Even though options can give you leverage as to what you will or won’t do without additional payment, if the client ultimately feels you aren’t playing fair, and not showing proper empathy for their needs, it will hurt you in the long run.  You may consider it fair pricing, but if the client doesn’t – you lose.

Compliments of Lew West Business Consultants
http://www.lewwest.com/   Blog – http://www.mynext30.com/

Have you ever taken the time to ask yourself these questions?

 Why am I doing this business? No, really – why am I investing the time to do this every day? What’s the purpose? What reasons cause me to do this, versus not doing this?

 Is your reason simply a surface answer, like money, or stuff, or “to get out of debt”? Very few people ever take the time to ask themselves this simple yet profoundly deep question. True success exists in the answer to this question. In fact, one of the very reasons so few make it big (I’m talking about the “dream money,” the luxuriously-and-ridiculously-large-lifestyle money) is that very few are willing to ask, contemplate and answer this simple yet profoundly deep question.

 Often people seek help, months or even years into their careers, searching for answers to their lack of production. There are many reasons for lack of production in the face of consistent work habits. Yet most can start at the core of their existence and find the answer.

 Why is it that you eat every day? Why is it that you show up at work? If you don’t eat, you begin to painfully shrink away, become increasingly ill, and soon simply stop existing. Death becomes you. If you fail to show up at your work, you will no longer have a business, which means the roof over your head no longer exists, the relationship you had with your significant other may wither away, your children look at you cross-eyed on the way to the orphanage, and strange men come to pick up your car, your furniture and your lifelong collection of belongings. You’re left with nothing.

Do you eat just because you must? Do you show up to work just so you can make a bi-weekly check and pay the bills?

 Search deeply in your soul for the reasons WHY you do things, and you’re much likelier to DO those things…and do them well. Owning your own business is not a requirement in life. We must eat, sleep and breathe-but we don’t HAVE to own our own business. We do it for a reason. If you can find the reason or reasons you ended up here, your search for success will finally have ended. Victory will become you. Those who know exactly why, – who know the true reasons that cause them to act, – are those who achieve success with ease.

 Find yourself a purpose and you’ll find more than enough inspiration to guide you through even the most treacherous storms life brings you.

 In your search for your core reasons for doing this business, you may come up with a list of inspiring reasons that will cause you to act with a fervency so great, some would describe you as insane, crazy or “workaholic.” In reality, you have found a level of balance and peace which cause things to come to you with ease. Your purpose is so great and so clear that the actions it takes to create or produce become second nature. Success comes to you with ease.

 Others may have to search long and hard for a purpose, not only in their businesses but in their lives in general. Choose carefully the locations where you go to seek answers to your life’s purpose. Find a quiet place. Sit and write. Think and ponder. Decide what the real reasons are for your desire for riches or whatever else it is that you seek in this business.

 Achieving absolute clarity in your reasons for doing business will make doing business much more fulfilling. There’s simply no time, no room for fogginess of mind on the platform of success and accomplishment.

 The moment you discover your true reasons for doing your business, the second you become clear, that is the instant when you’ll discover how effortless success can be.

 Ask yourself, “Why?” And take the time to come up with the answer!

 Compliments of Lew West Business Consultants
http://www.lewwest.com/   Blog – http://www.mynext30.com/

You have a new “Concept” or “Idea”.  Congratulations!  Now what do you do?

If the acquisition of capital is your primary goal for your business, then let’s take a step back and see what you need to do.

Many entrepreneurs become so excited with their New Concept they mentally start banking their money – but oops, they don’t have any money.  No problem. They’ll shop their great new concept to the highest bidder, get enough to pay-off their debts, hire the necessary personnel to run the new piece of business and still have a healthy operating budget.  Sounds doable, right?   

And Why Not?  It seems you read about these kinds of successes all the time, don’t you!? 

While you should “never say never”, the reality of the odds playing out, as described above, are right up there with winning the national lottery.  The good news is there are ways to better those odds.

1. Specifically, know who you are going to approach to request funding.  Gather all of the contact information and as much background knowledge as possible about the company and/or the contact person you will be approaching.

To keep rejection to a minimum, search out those investors who have an interest in your industry and specifically your niche focus.  Just because an individual or group has money to invest doesn’t mean your particular niche is of interest to them.  e.g. – if their passion is to build a station on the moon, don’t ask them to fund your fishing rod conversion system.  You will only suffer an unnecessary rejection.  It isn’t personal; the Investor just isn’t interested in your concept no matter how well you have developed your concept and financial information.

Generally the funding options are:

• Banks
• Third Party Investors (includes Angel Investors and industry Investors)
• Venture Capitalists  (be very clear on what they want in return from you)
• Private Lenders  (usually family or friends)

2. Some of the Basics you will need to have ready:

If your “concept” or “idea” is to be taken seriously by any of these investors it must be verified with a well developed business model/plan.  This plan includes how much capital you are going to need and specifically how you are going to use it.  

When you are able to catch an Investor’s interest in your business proposition, the first thing they will do is to review your supporting financials in order to understand if this business proposition supports a sustainable and scalable investment opportunity (on-going profitable growth curve).  If your numbers pass their scrutiny, they will then – and only then – want to:

• better understand the product offering,
• investigate the potential investment opportunity more fully, and
• review your management team. i.e. -do you and your key personnel have the ability and expertise to make it happen?

Your well developed business model/plan will be a major key in the investor’s decision as to whether your concept is worth pursuing.

If you have shown the Investor realistic financials with verifiable backup information, they will then want to review a well developed Business Model/Business Plan.   If they are going to invest their money into your concept, they want an in-depth understanding of the business.

Remember, their business is funding companies with the expectation of receiving a profitable return as soon as possible. They aren’t interested in dreams and they don’t like surprises.  

Great things can happen if you put your concentrated effort, energy and diligence into the development of your business plan.  Pick the Investor with the most empathy and appreciation of your concept, and present realistic financials knowledgeably. 

Build the odds in your favor.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

I am often amused when someone claims they don’t need a BP (Business Plan) because they “fly by the seat of their pants”, or “a BP is a waste of time”; then smugly point out they have never had a BP and they are so busy they can’t keep up.  To me, that’s a sign they are in the middle of a wild fire instead of a controlled burn. One day they are going to burn out.

To have a successful business it is necessary to keep track of income; cost of goods; general expenses; payroll; commissions, principal’s draw – in other words;

• finances;
• how a larger segment of the marketplace can be gained and maintained;
• employee management;
• distribution – to name a few. 

Whether they are keeping this information in their head, or delegated to trusted employees, they are working a rough version of a BP.  Unfortunately without a clear vision of what their company will look like at maturity, they will never get there.  The entrepreneur will never know when to step back or how to set up the company to flourish on its own.  Instead, the entrepreneur is establishing a guaranteed, forever Job.

Every active company has some kind of a BP, even if they don’t have it in an organized format. It is also a fact that without a tangible interactive plan they never realize the full potential of their business. There will always be some aspect of the business being neglected because the owner becomes so engrossed in just one or two areas that the overall health of the company is forgotten.

The same holds true for someone with a great business idea.  Even though owner can’t imagine how it could possibly fail, now is the time to check that concept with real numbers from the marketplace.  Even if they are convinced it will be profitable, until the marketplace is surveyed and the numbers are run, they are only projecting hope, not reality.    

A great deal of money can be saved by developing an informational BP that lays out an outline of the business, including costs and income.  Caution should be taken here.  Often an entrepreneur is so eager for it to work, there is a tendency to skew the numbers.   Now is the time that it is imperative to be objective and honest.  Make the business show You how it can be profitable.  If you can’t see a profit on paper now, how do you expect it to be profitable in the future? Better to spend a little money now in finding if the company can be profitable than for you to invest your life’s savings only to lose it all – including the capital seed to start a different business.

Entrepreneurs are not gamblers; true entrepreneurs only take calculated risks.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

In case you hadn’t noticed, many articles, experts, textbooks, etc. tell you that you are “confused” if you don’t subscribe to their particular definition of business terms.  I too have my set of definitions, and because this is my Blog you will find them listed below.

Please understand that my definitions, along with everybody else’s, are only words.  To each of us, in our attempt to convey those illusive, intangible concepts of business success, believe our words best describe them. 

The important thing, however, is that You are able to grasp the basic key concepts necessary to drive your business to its greatest potential.   

My favorite quote is, “If you don’t know where you are going, then you are probably already there.”  Becoming as clear as possible as to “Where You are Going” is often the difference between success and failure. 

I’m for success – by any definition.

 #1. Strategy or Action augmentation:

Here you utilize your “big picture” goal and begin enhancing that picture with the information accumulated in #1 & #5. From this collection of information, you can initially set the course

• for your business,
• its marketing direction and
• define the milestones to “make it happen”! 

 Bonus: Ultimately you want your strategies implemented in a way that your company is making money without you even being there – the quicker the better.

 #2. Financial Tracking: 

All income needs to be tracked daily – e.g. cash-flow and expenditures, sales, distribution, payroll and benefits, assets, inventory – in other words anything to do with what is happening to your company’s money.

 Bonus: Whenever funding is needed, you can create the requested documentation from your operation and financial summaries. 

 #3. A Marketing Plan is only one piece of your Grand Plan – albeit a very important and visible piece.  A Marketing Plan promotes your product to a specific segment of the marketplace.  By generating excitement and recognition for your product or service, Marketing’s role is to drive customers in your door. Once in the door, you close the sale, deliver their order and collect your money. 

 #4. Sales:

While Marketing creates the customer excitement and desire for the product or service, Sales does the actual close of the sale and collects the payment.  Although Marketing and Sales work closely together, their purpose and execution is very different.  Marketing creates a positive marketplace enabling Sales to utilize Marketing’s materials and created “need” to close the sale with individual clients.

 Bonus: Marketing generates interested prospects, Sales convert prospects into clients.

 Customer Service and Customer Retention are an important part of Marketing and Sales.  Questions and problems must be handled promptly and cheerfully along with scheduled on-going customer follow-up.

 #5. Operations:

Orders need to be filled quickly and efficiently so customers will be happy to reorder again, and become long-term clients. Quality of service while keeping costs in line is a major responsibility of Operations.  Depending upon the company structure,  employees are usually accountable to Operations.

 Bonus: Operations implements systems/procedures building toward company maturity while maintaining a unified and coordinated staff to achieve the company’s goals and purpose. 

 Congratulations! You now have a Working Business Plan!  All of the Steps listed #1-#5, are only segments of your total “Business Plan”.  Together the segments lay out a coordinated, tangible picture of your business, adjustable to the changing needs of the marketplace.

 Bonus: During this process, you have run various scenarios illustrating what will work and what won’t, and what would have only cost you time and m

By taking these preliminary planning steps,  

Your business will be set-up for long-term success.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com