Monthly Archives: April 2013

Ten Mistakes To Avoid When Writing a Business Plan

You might have a brilliant home based business idea but if your business plan is riddled with mistakes you will not be able to convince a bank or investor to pump money into your business. The reasons why many entrepreneurs make mistakes when drafting a business plan are lack of knowledge in writing a business plan, rushing to write a business plan and not hiring a professional. Every aspiring business owner should have a business plan. And the business plan must avoid several major mistakes that make a business plan a “poor” business plan.

The following are common mistakes to avoid when writing a business plans.

1. Incomprehensible business plan

Social media has killed the art of proper writing. When writing a business plan written in proper English. Make sure it does not contain errors in spelling, punctuation, grammar and style. A business plan is a reflection of your level of knowledge and education. If your business plan is full or errors and poorly written the reader might conclude you lack intelligence and not qualified to run a business. Proof read your document 5 times. Ask a friend to proof read it for you.

2. Poor formating

Your business plan should follow basic rules of typesetting. A business plan with inconsistent margins, missing page numbers, incomplete charts and tables without headings, or a missing table of contents will not only be difficult to read but will also convey a negative image to the reader.

3. Incomplete business plan.

Make sure your business plan does not miss any aspect of a sound business plan. A business plan should include statements of the vision and mission of your business; the core values,SWOT analysis; information on the customers, products and services; marketing and sales information; management team; analysis of competition; and detailed financial projections (e.g. monthly cash flow and income statements, as well as annual balance sheets–going out at least three years to five years.

4. Too shallow

Don’t be brief and assume the reader will just assume what you mean. Include all the important details in your business plan.

5. Too much information.

Too little information is bad but too much information is equally bad. If the business plan is over 200 pages, the reader will get bored going through it. Try to keep things minimal by using figures, charts and tables. Touch on the specific points and leave the general details for the actual presentation.

6. Unrealistic assumptions.

Writing a statement like ‘I plan to profitable by the second year and be the leading provider in my two” that is being to naïve and vague. A more realistic statement would be “I plan to get 20 clients by year end and increase that number to 40 in year two”

7. Business plan built on hot air/guess work

Make sure all the information is based on true facts. Don’t guess the potential size or the market or assume the total number of competitors. Go to your local business bureau offices and gather factual business statistics.

8. Under estimating risk.

There is no such thing as a “no risk” business. Risk can be anything from customer failing to honor payment to you dying. Be aware of any potential risk and write it down and explain how you plan to mitigate against it.

9. Assuming you have no competition.

Just because no one is offering a product/service similar to yours does not mean you have no competition. The competition may not be direct but in-direct. If you are opening a tea shop in an area full of coffee shops you will be in-directly be competing with coffee shops.

10. Lacking plans on how to achieve your goals.

A business plan is full of goals but it must be backed by details on how you will achieve those goals. That includes, marketing plan, sales plan, quality product and management.

Avoid these mistakes and you will be on the road to success. Remember, if in doubt, consult a professional to guide you.

How To Obtain A Small Business Loan For Your Business

The biggest cause of failure for new and small businesses is insufficient  working capital. If you don’t have enough working capital you are most likely to run out of cash before you establish enough clients to sustain your business. One source of start up capital is a business loan from a commercial bank.

Banks Policy on Small Business Loans

Before you go out to seek a loan from a lender you need to understand how lenders think and operate. Lenders are only willing to work with a business person who is already taking a risk in a business. They often require you to have contributed at least 25% of the starting capital. You must also be willing to provide other personal guarantees like, real estate, motor vehicle and stocks. In short, a bank won’t work with you if you are not willing to risk your money and other assets.

They also prefer dealing with an existing business over a new business. If you have been in business for 2-3 years you stand a better chance of wringing money out of a bank manager. Lenders are happy to advance money to a business that can demonstrate a history of settling debts, bills and payment to suppliers.

Now that we know how lenders think and operate, let us now explore how to present a compelling case for a small business loan.

Preparing a Small Business Loan Proposal

Almost all lenders have a printed document to guide you in applying for a small business loan. Just approach your lender of choice and ask for a “Loan request form” or “Small Business Loan Application Form”

Items compiled into a small business loan request form include the following:

– Amount of money requested

– Monthly revenues

– Monthly expenses

– Collateral, if any is owned by the business

– Total debts

– Etc

These information must be backed up by audited statement of accounts. It has to be the latest.

Have a relationship with your bank

You stand a good chance of getting a small business loan for your business if you have an on going good relationship with a lender. Don’t just set up a bank account and just be going to the bank to deposit and withdraw money. Take time to know the people who work at the bank. The key people every business person should know are, the credit manager and branch manager. If it is a small community bank you won’t go wrong by knowing a member of board of governors.These are the decision makers in the bank and if they know you well and can vouch for your character, they will always recommend approval for your loan request so longer as your request is reasonable.

Being loyal to one bank has big advantage. The bank has all the details of your in comings and out goings and they will have all the evidence they need to make a decision on your application. Also, they already know your level of trust worthiness.

Proving worthiness of your proposal

Lenders always follow a formula in determining whether to give or not give a loan. The lender will always want to know whether the loan can be repaid.  They will comb through your documents looking for evidence on how the loan will be repaid.

Your small business loan application will be made or broken by your cash flow. If there is evidence of money coming in, the lender won’t hesitate to advance the loan. Have a solid business plan to inspire the lender’s confidence in your business. In addition to sales projections and cash flow projections, provide information on business operations, marketing efforts, management ability, and personal balance sheet demonstrating the worthiness of the business.

If You Don’t Succeed At First….So What?

If you write the best loan application form and you don’t succeed, don’t lose heart. There are many reasons why a loan officer might turn done your request. He might have disliked the suit you came in wearing(you looked cheap), he might have been uncomfortable with your attitude or the bank might be short of money to lend and he does not want to cause alarm by making it public.  Banks are businesses operated by humans. Humans have a habit of allowing their bias to influence their decision making. What am trying to explain is the reason to reject your loan may be personal rather than commercial.

If one lender rejects your request, move on to the next lender.

Simple Guide to Drafting a Business Plan For A Home Based Business

They say failure to plan is to plan to fail. Writing a business plan for your home based business will go a long way to making your business a success. Most owners of home based business make the mistake of having the idea in their head. Just having a great idea in your head is not enough you need to write down the idea. Writing the idea down you will making it easy for a financier to understand it. Even if you aren’t going to be borrowing money for your start up home based business, you still want to guide to assist you execute your plans.

A well written, thoughtful, realistic business plan will go along way in actualizing your dreams.

Defining your goals and objectives

The first step in writing a home based business plan is to clearly define your goals and objectives. Don’t just be vague and say you want to xxx amount of money in two years and be the number one provider in your area. You need to be clear and say something like “By the end of first year I want to have 20 monthly clients bringing in $12,000 a month.” It’s a good to break this into segments. In in the first month target 5 clients. By month six set a target  of 10 clients. A home based business plan that outlines your objectives this way gives you a road map to refer to and will ensure you’re on the right track and that you stay there.

Estimating the Market Size

Many aspiring business people have set up a business only to discover the demand for their service/product is either limited or at worst non existent. If they had a done a market survey before embarking on their entrepreneurial journey they would avoided this disappointing discovery. If your home based business is going to provide business curtain cleaning services, for example, you’ll want to be sure that there are enough homes, and offices in your immediate area that need your service. This information can be gathered from local classifieds, yellow pages and local business council.

Write Down your Expenses

Next, item to consider is all the costs your home based business will incur. The cardinal sin made by people who operate a business from home is they fail to consider the small expenses. Printer ink, paper, postage, long distance phone calls and cell phone bills are easily missed when considering the cost of operating a home based business. These expenses may seem small but they add up over the long term. Another important reason for writing down your monthly expenses is it will help you know how much revenue you need to bring in per month to break even.

Writing Down Your Marketing Plan

Doing a business without marketing is like winking at a girl in the dark. After starting your home based business you need a marketing plan to generate a demand for your business. The best form of marketing a home based business is advertising and direct sales.  Advertising through TV is effective but because of the cost involved it is out of reach for a small home based business.  Radio is a good option but if that is out of your budget, advertise through local classified ads. For those who have no money to advertise, consider free strategies such as flyers, circulars and posters to begin with.  Don’t forget web advertising. Programs such as Google Ad Words are cheap and very effective for targeting local communities.

Tips for Starting an Internet Home Based Business

The internet has levelled the playing field for commerce. A person no longer has to have a store front or a commercial office to run a business. The internet has allowed many people to build an internet home based business.

Basic Advantages of an Internet Home Based Business

Setting up an internet home based business has become an easy and popular way to run a home based business. One advantages of running a business online is the opportunity to serve a huge marketplace, there are millions of people using the internet on daily basis. A business getting just 10 buyers a day can do very well.

Another advantage of running an internet home based business is a well designed website can give the illusion of of a big business. The internet creates a false sense of reality. One person can run what seems like a large business, but is actually an internet home based business.

Before you can begin to build an internet home based business it is important to gain some knowledge about the internet. Teaching yourself a little bit about how a web page is built or how to perform certain tasks can go a long way. However, you do not need to know a lot about web programming. There are a lot of web site builders that make building a website simple and easy.

The biggest difficulty with beginning an internet home based business is deciding what type of internet home based business you want to run. There are many options and deciding which one is right for you can be as simple or complex as you want to make it. The easiest way to decide is to build a business around what interests you (your hobbies).

Types of Internet Home Based Businesses

There are different types of internet home based businesses, but they all fall into a combination of four categories (selling, offering services, offering information, and advertising).

Category 1: Selling – An internet home based business can sell any type of product or service. Some businesses chose to sell products from their own website by using a shopping cart program. Whereas others chose to sell off of websites designed to sell products (like Ebay). Another method people use to sell items is through classifieds. All methods can be used to offer a more widespread plan.

Category 2: Offering Services – An internet home based business can either offer a service that another person may need (like web design or programming) or can offer a service that brings the “have’s” and the “have not’s” together. Depending on the service the internet can be an excellent place to work from, because of the instant communication and immediate gratification it offers. However, if a service that is offered requires you to travel to a specific location your service market will be greatly reduced.

Category 3: Offering Information – The internet holds volumes of information. An internet home based business can offer information to teach others about what they know. Depending on the information offered it can be sold for a price or the information can be used to generate traffic to a website. Some highlights of offering information include forums which offer information and a place for people to interact with other people who are giving and seeking information, web articles offer information by allowing people to read and learn, and blogs offer information by offering an insiders opinion on any topic.

Category 4: Advertising – Advertising can either generate revenue by others paying to advertise on your website or advertising can be an expense to an internet home based business. However, many internet home based businesses are utilizing advertising as both a means of generating revenue and as an expense to increase the traffic to their site. An internet home based business can make a location for others to advertise a good place to advertise by having a high amount of traffic. Additionally, there are many internet home based businesses that join affiliate programs offered by many large companies that offer a monetary reward for marketing their business.

After you decide which direction you want to focus your internet home based business the next best step is to start learning how others are making a profit. Participate in the many programs on the internet. If you are interested in selling items as an internet home based business take a look at the ways everyone is currently selling items. Learn the basics of buying and selling on Ebay. Learn about the different methods of payment offered on the web. If you are interested in making an internet home based business by offering services find others who are offering services that you are considering and investigate how they generate income. If you are interested in offering information as an internet home based business find out what information is out there and determine how you can make that information better. If you are interested in creating a business with advertisement generated income learn how people currently advertise and what type of location is needed for them to advertise at the locations you offer. The biggest step you can make is to research and know what others are doing then determine how to make your internet home based business bigger and better than the rest.

7 Simple Steps To Choosing a Home Based Business That is Right for You

There are hundreds of home based business ideas for anyone to start but not every idea is right for you. An idea such as a dog sitter might be perfect for a dog lover but it will be repulsive to someone who is allergic to dogs or simply doesn’t like dogs.

Here are 7 simple steps to help you choose the Home Business that is right for you.

Step 1: What is your Passion?

There is no doubt the most successful businesses have been built around the founders passion. Steve Jobs built Apple around his passion for computers and Colonel Sanders built KFC around his passion for cooking.

So the first thing you need to do is look for something that you are passionate about, that you love doing in your spare time, and see if there is a business opportunity there.

So whether it is picking dogs pooh or baking or writing short stories or whatever, your degree of success is likely to be higher if the home business is based on something that you love doing.

I say “Follow your Bliss”

Step 2: How much Free Time can you dedicate to your home business?

Every home based business idea is different in the amount of time it requires to operate. A baby sitting business will require a few hours in the evening but a home gardening business will require full day activity in your back yard garden.

So now you need to decide how much time you will be able to devote to your new business.

Step 3: How Much Money is available to invest in your Home Business?

The crunch of the matter is you will need some cash to make a go of anything, but some types of home based businesses require a lot more money than others. If you have $50,000 in your saving account you have more choices on the ideas you can try out. But for someone will little capital he will have to look at ideas that require little or zero capital. If you have little start up capital, doesn’t despair. Internet has made it easy for people to start businesses with little capital. You can get a free website and free access to forums where your potential customers hung out. Websites such as ebay and amazon allow you to set up an online store free of charge. The only start up capital is the cost of connecting to internet. (If you can’t afford that, use free internet at public libraries).

Step 4: What are your Specific Skills – what are you good at?

The truth is, you can’t set up a book keeping home based business unless you have the necessary CPA certifications. Ask yourself what are my qualifications? Depending on your answer look at home based opportunities that can utilize your personal skills.

Another great question to ask yourself is “What am I good at? If you are great with people and love to meet new people and can chat easily to strangers, then a Network Marketing business may be right for you.

If you are good with words, are a good writer and can put complex ideas into simple terms, of if you are creative and can think outside the box, then you might consider trying freelance writing, online research or blogging.

Step 5: Look at the Options that fit your profile

If you are ultra-shy, you will find it hard to hack it in the world of network marketing or direct sales. There is nothing wrong with being shy and being shy shouldn’t be a handicap to business success. A shy person should find opportunities in areas that require less person to person interaction. Such areas include, book keeping, gardening, freelance writing, graphic design etc.

Step 6: Do your more detailed research.

Once you have identified 2 or 3 business options or ideas that look good for you, then you need to do some more detailed research into those options. Is there a market need for your Product? Is the Franchise Company growing strongly in other parts of the country and does it have good leadership? what is the client base?

Step 7: Take the First Step and Do It

After finding your calling, now do it. Don’t make the cardinal mistake of most dreamers. The spend hours trying to analyze whether the idea will work. The only sure way of knowing whether an idea will work is by testing it. Or in simple words, launching it and see the customer response.

Don’t put of the idea until you are sure. You will never be sure and the longer you put off doing something, putting your dream business idea into action, the less likely you are to actually get it up and running.

Now go out and try that idea you have been sitting on.

The Importance of the Right Attitude in Your Home Based Business

Anyone starting a home based business needs to strike a balance building the right attitude and building the foundation of the business. Many people who start a home based business make a mistake of focusing on too much on the setting up the business and forgetting to work on their attitude. After everything has been set up they sit there and started wondering why aren’t customers calling me or who do I sell to. It is submitted that what these people lack is the right mental attitude to owning their own home based business. This article therefore highlights three mental characteristics of successful home based business owners.

Attitude that makes a successful home based business

1. Tenacity

The majority of us have very low appetites for risk. We get one failure and we raise the white flag. What we need to know is success is accumulation of small failures. Very few successful entrepreneurs found success on their first idea. The majority of successful business people found success on their third or fourth idea. But what did the business owner that failed time and time do after every failure? He just dug his heels in and spent his energy and efforts on his next business project.

Story of Henry Ford. While Ford is today is a global brand  that is celebrated a business success, most people don’t know the founder wasn’t an instant success. In fact, his early businesses failed and left him broke five times before he founded the successful Ford Motor Company. Did he throw in the towel at those early set backs merely because he felt that doing business was tough? No he persisted and revamped his operations came out with his own business model (The Assembly line) that was revolutionary.

Only persisting and innovating at something that you strongly believe in can results start coming in your home based business.

2. Reasonable expectations

It is important you have realistic expectation when you start a home based business. The number of clients will depend on the number of qualified leads you will get. You must understand this. A home based business is a direct sales business you must remember that so you should always have reasonable expectations that the number of sales is proportionate to the amount of promotion that you do.

Steve was home based business owner who cold called randomly on clients and was dismayed by the large number of people who told him they were not interested in what he was selling. Susan on the other hand spent her money on paying leads generations company to send her qualified leads. At the end of three months, Steve had nothing to show for his efforts but gripe. Susan on the other hand was closing sales and high ratio. Needless to say Susan made more money with her home based business.

3. Take responsibility for your business

Some people fail to realized that to build a successful home based business you need to be a Jack of all trades. You will be your own marketing department, customer service and everything rolled into one when you start your own home based business. If you can’t accept this burden, you are in the wrong career! I Urge you to take full responsibility of your home based business and focus on things that directly affect the number of sales of your business.

If you look at the story of Steve and Susan. Steve failed to grasp it was his responsibility to make sure he found qualified leads. He could have either done it himself or did what Susan did; Hire someone to do it.

In conclusion, we have covered three principles that are present in any successful home based business owner. Take massive action today by writing down a plan of action and write clearly what you hope to achieve out of this and your home based business sales will start increasing slow but surely. Remember any business be it a home based business or a traditional business takes time. Work hard at the sales aspect of it and you will find that your income will rise.