APPENDIX C: INFORMATION RESOURCES

U.S. Small Business Administration (SBA)

The SBA offers an extensive selection of information on most business management topics, from how to start a business to exporting your products.

This information is listed in The Small Business Directory. For a free copy contact your nearest SBA office.

SBA has offices throughout the country. Consult the U.S. Government section in your telephone directory for the office nearest you. SBA offers a number of programs and services, including training and educational programs, counseling services, financial programs and contract assistance. Ask about

• Service Corps of Retired Executives (SCORE), a national organization sponsored by SBA of over 13,000 volunteer business executives who provide free counseling, workshops and seminars to prospective and existing small business people.
• Small Business Development Centers (SBDCs), sponsored by the SBA in partnership with state and local governments, the educational community and the private sector. They provide assistance, counseling and training to prospective and existing business people.
• Small Business Institutes (SBIs), organized through SBA on more than 500 college campuses nationwide. The institutes provide counseling by students and faculty to small business clients.

For more information about SBA business development programs and services call the SBA Small Business Answer Desk at 1-800-U-ASK-SBA (827-5722).

Other U.S. Government Resources

Many publications on business management and other related topics are available from the Government Printing Office (GPO). GPO bookstores are located in 24 major cities and are listed in the Yellow Pages under the bookstore heading. You can request a Subject Bibliography by writing to Government Printing Office, Superintendent of Documents, Washington, DC 20402-9328.

Many federal agencies offer publications of interest to small businesses. There is a nominal fee for some, but most are free. Below is a selected list of government agencies that provide publications and other services targeted to small businesses. To get their publications, contact the regional offices listed in the telephone directory or write to the addresses below:

Consumer Information Center (CIC), P.O. Box 100, Pueblo, CO 81002. The CIC offers a consumer information catalog of federal publications.

Consumer Product Safety Commission (CPSC), Publications Request, Washington, DC 20207. The CPSC offers guidelines for product safety requirements.

U.S. Department of Agriculture (USDA), 12th Street and Independence Avenue SW, Washington, DC 20250. The USDA offers publications on selling to the USDA. Publications and programs on entrepreneurship are also available through county extension offices nationwide.

U.S. Department of Commerce (DOC), Office of Business Liaison, 14th Street and Constitution Avenue NW, Room 5898C, Washington, DC 20230. DOC's Business Assistance Center provides listings of business opportunities available in the federal government. This service also will refer businesses to different programs and services in the DOC and other federal agencies.

U.S. Department of Health and Human Services (HHS), Public Health Service, Alcohol, Drug Abuse and Mental Health Administration, 5600 Fishers Lane, Rockville, MD 20857. Drug Free Workplace Helpline: 1-800-843-4971. Provides information on Employee Assistance Programs. National Institute for Drug Abuse Hotline: 1-800-662-4357. Provides information on preventing substance abuse in the workplace. The National Clearinghouse for Alcohol and Drug Information: 1-800-729-6686 toll-free. Provides pamphlets and resource materials on substance abuse.

U.S. Department of Labor (DOL), Employment Standards Administration, 200 Constitution Avenue NW, Washington, DC 20210. The DOL offers publications on compliance with labor laws.

U.S. Department of Treasury, Internal Revenue Service (IRS), P.O. Box 25866, Richmond, VA 23260. 1-800-424-3676 The IRS offers information on tax requirements for small businesses.

U.S. Environmental Protection Agency (EPA), Small Business Ombudsman, 401 M Street, SW (A-149C), Washington, DC 20460. 1-800-368-5888 except DC and VA... 703-557-1938 in DC and VA... The EPA offers more than 100 publications designed to help small businesses understand how they can comply with EPA regulations.

U.S. Food and Drug Administration (FDA), FDA Center for Food Safety and Applied Nutrition, 200 Charles Street SW, Washington, DC 20402. The FDA offers information on packaging and labeling requirements for food and food-related products.

For More Information

A librarian can help you locate the specific information you need in reference books. Most libraries have a variety of directories, indexes and encyclopedias that cover many business topics. They also have other resources, such as

• Trade association information -- Ask the librarian to show you a directory of trade associations. Associations provide a valuable network of resources to their members through publications and services such as newsletters, conferences and seminars.
• Books -- Many guidebooks, textbooks and manuals on small business are published annually. To find the names of books not in your local library check Books In Print, a directory of books currently available from publishers.
• Magazine and newspaper articles -- Business and professional magazines provide information that is more current than that found in books and textbooks. There are a number of indexes to help you find specific articles in periodicals.

In addition to books and magazines, many libraries offer free workshops, lend skill-building tapes and have catalogues and brochures describing continuing education opportunities.

APPENDIX B: HOW TO WRITE A BUSINESS PLAN (Pt 2)

VI. Financial documents

These are the records used to show past, current and projected finances. The following are the major documents you will want to include in your business plan. The work is easier if these are done in the order presented.

• Summary of financial needs -- This is an outline indicating why you are applying for a loan and how much you need.
• Sources and uses of funds statement -- It will be necessary for you to tell how you intend to disperse the loan funds. Back up your statement with supporting data.
• Cash flow statement (budget) -- This document projects what your business plan means in terms of dollars. It shows cash inflow and outflow over a period of time and is used for internal planning.
• Cash flow statements show both how much and when cash must flow in and out of your business.
• Three-year income projection -- A pro forma income statement showing your projections for your company for the next three years. Use the pro forma cash flow statement for the first year's figures and project the next according to economic and industry trends.
• Break-even analysis -- The break-even point is when a company's expenses exactly match the sales or service volume. It can be expressed in total dollars or revenue exactly offset by total expenses or total units of production (cost of which exactly equals the income derived by their sales). This analysis can be done either mathematically or graphically.

Note: The following are actual performance statements reflecting the activity of your business in the past. If you are a new business owner your financial section will end here and you will add a personal financial history. If you are an established business you will include the actual performance statements that follow.

• Balance sheet -- Shows the condition of the business as of a fixed date. It is a picture of your firm's financial condition at a particular moment and will show you whether your financial position is strong or weak. It is usually done at the close of an accounting period and contains assets liabilities and net worth.
• Income (profit and loss) statement -- Shows your business financial activity over a period of time (monthly annually). It is a moving picture showing what has happened in your business and is an excellent tool for assessing your business. Your ledger is closed and balanced and the revenue and expense totals transferred to this statement.
• Business financial history -- This is a summary of financial information about your company from its start to the present. The business financial history and loan application are usually the same. If you have completed the rest of the financial section you should be able to transfer all the needed information to this document.

VII. Supporting documents

These are the records that back up the statements and decisions made in the three main parts of your business plan. Those most commonly included are as follows:

• Personal resumes -- Should be limited to one page and include work history educational background professional affiliations and honors and special skills.
• Personal financial statement -- A statement of personal assets and liabilities. For a new business owner this will be part of your financial section.
• Credit reports -- Business and personal from suppliers or wholesalers credit bureaus and banks.
• Copies of leases -- All agreements currently in force between your company and a leasing agency.
• Letters of reference -- Letters recommending you as being a reputable and reliable business person worthy of being considered a good risk. (Include both business and personal references.)
• Contracts -- Include all business contracts both completed and currently in force.
• Legal documents -- All legal papers pertaining to your legal structure proprietary rights insurance titles etc.
• Miscellaneous documents -- All other documents that have been referred to but are not included in the main body of the plan (e.g. location plans demographics advertising plan etc.).

Putting Your Plan Together

When you are finished: Your business plan should look professional, but the lender needs to know that it was done by you. A business plan will be the best indicator he or she has to judge your potential for success. It should be no more than 30 to 40 pages long. Include only the supporting documents that will be of immediate interest to your potential lender. Keep the others in your own copy where they will be available on short notice. Have copies of your plan bound at your local print shop, or with a blue, black or brown cover purchased from the stationery store. Make copies for yourself and each lender you wish to approach. Do not give out too many copies at once, and keep track of each copy. If your loan is refused, be sure to retrieve your business plan. For a more detailed explanation of each section of the business plan outline, see SBA's publication, How to Write a Business Plan, which includes step-by-step directions and sample sections of actual business plans. Also available from the SBA is a VHS videotape and workbook, The Business Plan: Your Roadmap for Success.

APPENDIX B: HOW TO WRITE A BUSINESS PLAN (Pt 1)

The following pages provide a suggested outline of the material that should be included in your business plan. Your final plan may vary according to your needs or because of the individual requirements of your lender.

What Are the Benefits?

Every business can benefit from the preparation of a carefully written plan. There are two main purposes for writing that plan:

1. To serve as a guide during the lifetime of the business. It is the blueprint of your business and will provide you with the tools for analysis and change.
2. A business plan is a requirement if you are planning to seek a loan. It will provide potential lenders with detailed information on all aspects of your company's past and current operations and provide future projections.

Business Plan Outline

I. Cover sheet

Serves as the title page of your business plan. It should contain the following:

• Name of the company
• Company address
• Company phone number (include area code)
• Logo (if you have one)
• Names titles addresses phone numbers (include area code) of owners
• Month and year your plan was issued
• Name of preparer

II. Statement of purpose

(Same as executive summary.) This is the thesis statement and includes business plan objectives. Use the key words (who, what, where, when, why, how, and how much) to briefly tell about the following:

• What your company is (also who what where and when).
• What your objectives are.
• If you need a loan why you need it.
• How much you need.
• Why you will be successful.
• How and when you plan to repay your loan.

III. Table of contents

A page listing the major topics and references.

IV. The business

Covers the details of your business. Include information about your industry in general, and your business in particular. Address the following:

• Legal structure -- Tell what legal structure you have chosen and state reasons for your choice.
• Description of the business -- Detail your business. Tell about your history present status and future projections. Outline your product or service in terms of marketability. Project a sense of what you expect to accomplish in the next few years.
• Products or services -- Give a detailed description of your products from raw materials to finished items. Tell about your manufacturing process. If you provide a service tell what it is how it is provided and why it is unique. List future products or services you plan to provide.
• Location -- Describe site and why it was chosen. (If location is important to your marketing plan focus on this in the marketing section below.)
• Management -- Describe who is behind the business. For each owner tell about responsibilities and abilities. Support with resumes.
• Personnel -- Who will be doing the work why are they qualified what is their wage what are their responsibilities?
• Methods of record keeping -- What accounting system will you use? Who will do your record keeping? Do you have a plan to help you use your records in analyzing your business?
• Insurance -- What kinds of insurance will you need? What will these cost and who will you use for a carrier?
• Security -- Address security in terms of inventory control and theft of information.

V. Marketing

Covers the details of your marketing plan. Include information about the total market with emphasis on your target market. Identify your customers and tell about the means to make your product or service available to them.

• Target market -- Identify characteristics of your customers. Tell how you arrived at your results. Back up information with demographics questionnaires and surveys. Project size of your market.
• Competition -- Evaluate indirect and direct competition. Show how you can compete. Evaluate competition in terms of location market and business history.
• Methods of distribution -- Tell about the manner in which products and services will be made available to the customer. Back up decisions with statistical reports rate sheets etc.
• Advertising -- How will your advertising be tailored to your target market? Include rate sheets promotional material and time lines for your advertising campaign.
• Pricing -- Pricing will be determined as a result of market research and costing your product or service. Tell how you arrived at your pricing structure and back it up with materials from your research.
• Product design -- Answer key questions regarding product design and packaging. Include graphics and proprietary rights information.
• Timing of market entry -- Tell when you plan to enter the market and how you arrived at your decision.
• Location -- If your choice of location is related to target market cover it in this section of your business plan. (See location in the business section of this outline.)
• Industry trends -- Give current trends project how the market may change and what you plan to do to keep up.

APPENDIX A: SELF-ASSESSMENT QUESTIONNAIRE

_____ Have you developed a clear sense of direction or mission?
_____ Have you clearly defined the nature of your business?
_____ Do you have a clear philosophy for conducting your business affairs?
_____ Are your business goals obtainable?
_____ Are your objectives logically related in a hierarchy that will lead to goal achievement?
_____ Are your objectives clear,, measurable and tied to goal achievement?
_____ Do you periodically reevaluate your objectives to be sure they have not grown obsolete?
_____ Have you developed a logical and planned approach for collecting data on your environment?
_____ Are data stored or filed in ways that allow easy retrieval of useful information?
_____ Are reports produced that are seldom or never used?
_____ Do you periodically review your information system to make certain it is useful and up-to-date?
_____ Can you list four or five key strengths of your business?
_____ Are you aware of key weaknesses in your business?
_____ In developing your final strategy, did you consider three or four possible alternatives?
_____ Are you involving your employees in planning decisions?
_____ Did you take time to communicate the final plan to employees and deal with their concerns?
_____ Is your timetable for implementation of the plan realistic?
_____ Have you scheduled definite checkpoints for assessing progress toward goals?
_____ Have you developed effective ways of measuring progress?

SUMMARY / REFERENCES

SUMMARY

Strategic planning has become more important to business managers because technology and competition have made the business environment less stable and less predictable. If you are to survive and prosper, you should take the time to identify the niches in which you are most likely to succeed and to identify the resource demands that must be met. In larger businesses the steps outlined in this publication may be carried out by teams of experts or may involve the interplay of ideas among hundreds, even thousands, of managers. These guidelines are equally applicable to the entrepreneur sitting down with several key employees to discuss what can be achieved in the next two to three years, and what it will cost. The amount of time spent on each step and the resources devoted to this process will vary greatly from business to business, but it is vital to understand and employ these steps. The questions in Appendix A will help you recall the steps involved in developing a strategic plan.
_________________________________________________________________


REFERENCES

Glueck, William, and Lawrence Jauch. Business Policy and Strategic Management. New York: McGraw-Hill, 1984.

Hisrich, Robert D., and Michael P. Peters. Entrepreneurship: Starting, Developing, and Managing a New Enterprise. Homewood, IL: BPI/Irwin, 1989.

Miner, John B. Theories of Organizational Structure and Process.Chicago, IL: Dryden, 1982.

Pierce, John A., and Richard B. Robinson, Jr. Strategic Management: Strategy Formulation and Implementation. Homewood, IL: Richard D. Irwin, 1985.

Robey, Daniel. Designing Organizations: A Macro Perspective.Homewood, IL: Richard D. Irwin, 1982.

Rue, Leslie, and Lloyd L. Byars. Management: Theory andApplication. Homewood, IL: Richard D. Irwin, 1983.

Worth, Barry. Being an Entrepreneur in Today's SophisticatedEnvironment. St. Louis Business Journal (Dec. 25<196>31, 1989): 5A.

IMPLEMENTING THE STRATEGY

Implementation is usually thought of as something you do at the end of the strategic planning process. Okay, now we have this strategic plan; let's do it. If you think about what has been discussed in this publication, it becomes apparent that you will be considering the practical problems of implementation throughout the planning process. Frequently, a suggested alternative will be rejected because it would be difficult to implement. Or a preferred approach to marketing or production would be beyond the financial means of you or your investors.

The two primary issues that need to be considered in the final implementation process are communication and scheduling. Successfully implementing a plan depends on effective communication. Employee resistance often can be reduced, if not eliminated, if plans are openly presented and concerns are dealt with up front. In addition, to carry out new policies and procedures effectively, employees need to have a clear understanding of what is happening and what is expected of them. Better informed employees are more likely to do as you instruct them, thereby reducing the need for complex and costly control systems.

One key element in effective communication is involving your employees -- those who must carry out the plan -- as much as possible in the actual planning process. People who are involved in planning will have a solid grasp of the plan and their part in it when it is implemented. If employees are genuinely involved in the process, they are more likely to accept the result as a plan they helped develop. This result is often referred to as ownership.

Successful implementation also depends on a realistic schedule for the transition. It is too easy to assume away the difficulties of a major change and to anticipate that everything will be on track and running smoothly. How many times have you seen a news report about schedule and cost overruns on a government project? This kind of error can be disastrous if you are working within tight margins that can be quickly eradicated when costs and sales don't reach expectations on time. Realistic schedules require that you factor in training time, periods of low productivity, increased error rates and slowdowns as you correct organizational oversights. Schedules also should include planned checkpoints for carefully assessing progress toward full implementation.

Every business needs to develop systems for measuring and controlling progress toward strategic goals; no matter how loyal your employees or how strong the camaraderie, individual and organizational goals are not always the same. Three features distinguish effective control systems from ineffective systems.

• Standards -- These are your specific operative goals. The need to carefully set clear and measurable goals was emphasized earlier. (The processes of planning and controlling are most closely related for this reason.) Cautiously interpret how well your business performs relative to your goals. It is too easy to assume that, if you are not meeting your goals, the business simply is falling short. You also must reassess your original goals. Are the goals reasonable? Is it possible that you overestimated the firm's capabilities? Has something changed in the environment -- a new law, a new competitor, an economic downturn -- that has completely changed the playing field? If, for whatever reason, your goals are now too high, your employees, if forced to continue to pursue them, will become exasperated rather than motivated.
• Measurement -- Control systems must include quantifiable measures for monitoring performance. The lack of effective measurement systems is where control systems often fail. If you can set performance standards for profits and units produced, if you can tie standards directly to the goals of the plan, then building an effective measurement system is less difficult. Unfortunately, there are many tasks, particularly in management, that are difficult to assess. The output of these tasks, while critical to the overall success of the plan, is not usually measurable in clear units. Payoffs often only come after a long interval.
• Corrective measures -- Corrective actions must be carefully directed at the cause of discrepancies between planned and actual results, and the cause of problems is often very difficult to identify. It is fairly easy, for example, to blame an individual worker for goal failures. However, in complex business systems, where labor and sophisticated technology interact, production systems require careful coordination by managers who must deal with vast amounts of information. In the modern business world, it is becoming harder to identify the source of problems with one agent.

In setting up an effective control system, you need to make five key design decisions:

• Will you use behavior or output controls? As noted earlier, output controls are easier to develop if they can be directly related to the goal. Unfortunately, for many jobs, output controls don't make sense because of the indirect link between day-to-day work and long-term output.
• Do you have adequate means of measuring progress? Frequently, it is wise to use multiple measures of job and organization performance. Too many standards, however, can become cumbersome and costly.
• Have you properly focused your controls? As noted earlier, interdependencies between various tasks, technologies and phases of the production system can be quite significant. If your target of control is too narrow (e.g., The guy just isn't willing to make a reasonable effort.), you may be missing a more complex situation and find that your remedies don't really work.
• Have you determined proper intervals between assessments? You need to find a happy medium in this area. It might seem ideal to continually monitor fulfillment of the plan -- and information technologies do, in fact, enable you to do this in some situations. The cost of frequent measurements can, nevertheless, become prohibitive.
• Should you reward or punish to correct discrepancies? Both of these usually are used. However, overuse of punishment can lead to negative feelings and, eventually, failure to meet goals. Additionally, negative controls -- punishment systems -- require much more time to administer. This is because you constantly need to watch for deviations from desired behaviors if you are to catch and effectively punish offenders. A reward system, on the other hand, links appropriate actions to rewards, increasing the likelihood that you will observe positive contributions without the need for careful or frequent monitoring of day-to-day activities.

As you can see, control, like implementation, cannot be treated as an afterthought if you are to be successful in whatever strategy you choose. The standards are determined early in the strategic planning process as you set clear operative goals.Effective measurement and correction systems are crucial if you hope to encourage consistent performance that will lead to the realization of your strategic goals.

THE BUSINESS PLAN

The business plan is a succinct document that specifies the components of a strategy with regard to the business mission, external and internal environments and problems identified in earlier analyses. A business plan is not written each time a modification to a strategy is made. It should be written when you develop a new venture or launch a major new initiative. The business plan serves several important purposes:

• It helps determine the viability of the venture in a designated market.
• It provides guidance to the entrepreneur in organizing his or her planning activities.
• It serves as an important tool in helping to obtain financing (Hisrich and Peters 1989, p. 126).

A well-written business plan also will provide broad parameters upon which progress toward goals can be assessed and control decisions made at a later time.

A typical business plan begins with a brief introduction followed by an executive summary. The executive summary is prepared after the total plan has been written. Its purpose is to communicate the plan in a convincing way to important audiences, such as potential investors, so they will read further.

An industry analysis usually follows the executive summary. This section communicates key information -- the collection of which was discussed earlier -- that puts the venture or plan into the proper context.

The marketing plan is the first step in developing any new strategy. It is developed within the context of the company's goals and should be based on a realistic assessment of the external environment, as discussed earlier. The marketing plan is written first because marketing decisions typically determine resource needs in other areas. Obviously, a decision to seek a large share of a market will require a significant commitment of resources of various kinds. How you choose to promote and distribute your product or service will have clear ramifications for your organizational, production, human resource and financial plans.

The organizational plan details how your business is to be configured to most effectively support the marketing objectives. What kinds of skills are needed to carry out your plan? What sorts of skills do you have among managers and employees? What tasks will be done by which employees? What tasks will be contracted out? Many businesses, for example, hire the services of an advertising firm to improve their product promotions but handle their customer relations internally. Roles and responsibilities of each employee need to be clearly specified, as discussed in the section on goal setting.

Develop the production plan and human resources plan along with the organizational plan. Again, you must decide whether or not you will handle all production internally or contract all or part of it to other firms. What equipment will you need to meet the marketing plan? What will be the costs of manufacturing the product? What will be the future capital needs of the enterprise?

Human resource needs are clearly affected by decisions made in production planning. What human resources do you have? Will they be adequate to handle new or changed plans? What additional skills are needed? Will you seek employees who are already trained, or will you hire less skilled individuals and train them? If the latter, what resources will be needed for training, and how long will it take to obtain the desired levels of productivity?

The financial plan underpins this entire system of plans. Three financial areas are generally discussed (Hisrich and Peters, pp. 126-7). First, forecasted sales and related expenses need to be summarized. Monthly figures generally need to be estimated for a period exceeding one year, although the appropriate period will vary depending on the nature of the product and the stability of the market. Second, cash flow figures need to be estimated over the same period. A business needs to pay its bills in a timely fashion; many successful ventures end when suppliers refuse to extend additional credit to a business that hasn't paid its bills. Finally, a projected balance sheet that shows the financial condition of your business at a specific time needs to be prepared.

Usually an appendix is included in a business plan. This generally contains supporting information, documents and details that would interfere with clear communication in the body of the plan. Examples of this type of information include price lists, economic forecasts, demographic data and market analyses.

DEVELOPING A STRATEGIC PLAN (Pt 3)

Information Needs

The most important consideration in developing an effective approach to forecasting and planning is the development of your information system. In the world of personal computers, you may equate information systems with microchips and programming, but the concept as used here is much broader, referring to the way you gather, screen, analyze and use information that may affect your business. This publication is part of your information system. You are using it to inform yourself of modern approaches to managing, improving and possibly enlarging your business.

Too many businesses still have information systems that might be described as shoebox systems. Information about the business and its environment are collected in various documents that are stored in shoeboxes, or it is picked up through contacts between the owner and customers. The owner analyzes this information and the results are used to make further decisions.

The problems with this system are obvious. First, no effort has been made to determine what critical elements -- internal or external to the business -- should be assessed. Second, assessment is based entirely on what strikes the owner as memorable or important. Unfortunately, what is remembered is not necessarily what is important. Memory is influenced by preconceptions and perceptions, and by how busy, tired or distracted the owner was at the time an event occurred. An additional problem with this informal approach is that, should the owner want to verify his or her impressions of some series of events, it would be time consuming -- if not impossible -- to locate the records that would allow a full analysis. While seat- of-the-pants decision making based on this type of information system sometimes works remarkably well, much is left to chance.

Setting up an effective information system is integrally related to your mission and goals and to the specific environmental factors defined in your strategic purpose. Collect enough information, but don't collect too much this leads to information overload, where decision makers are so swamped they become incapable of making sense of the information, or of using it to make good decisions.

Developing a good system is a dynamic process. It is easy to determine what information you need to collect and how to obtain it. However, as the environment and your situation change, the information you need also changes. Items that were once important now are not. Other considerations, impossible to anticipate at the time you developed your system, have become critical.

Employees should be involved in determining what information is needed and where to obtain it. They are often the first line for data collection. They can provide insights and perspectives that you may not have considered. Together, you will be able to develop a reasonably thorough list of concerns that the information system should address.

In any information system, a variety of sources should always be used. You already collect much information in the documents you use to conduct everyday business. Other sources may include periodicals (particularly those published specifically for your industry), newspapers (or clipping services), books and experts in areas of concern.

Once you have collected the data, you will need to condense and analyze it. This is the information reporting system. You already produce reports for various government agencies and banks, which are nothing more than a presentation of the data you collect in a way that is useful to the particular agency. A good information system will provide information to employees in your business in a form that they need to make effective decisions and carry out their jobs. It will provide enough information, but not more than is necessary and useful. As the type of data collected changes over time, so will the reports needed. As a result, report requirements must be periodically reassessed so time is not spent producing useless reports.

Finally, information should be stored for easy retrieval to accommodate new situations that may require different analyses. In data processing, this system of storage is referred to as the company's data base. Whether you rely on an electronic or a manual system, storing information so it is easily retrievable requires considerable forethought. Much of the business software available today focuses on storing data in ways that allow it to be retrieved in many different forms and later combined for analyses that were not originally anticipated or necessary.

Internal Business Analysis

Once you've begun to collect the necessary information about your external environment, you will be able to consider how to best fit your business into the situations that surface. To do this you must clearly understand the strengths and weaknesses of your firm. For a long time, people assumed that small businesses were always at a disadvantage because they were small. Today, there are few commercial areas that don't have room for smaller competitors if they are focused and efficient.

The primary task in the business analysis phase is to identify those factors that may give you a competitive advantage. If you hold a patent or an exclusive license on a particular product or service, you may enjoy a competitive advantage. Flexibility is a major advantage that small businesses often enjoy over larger rivals. You may be able to respond more quickly and with less cost to mood swings or taste changes in the market. Also, small businesses can often move into new product or service lines more quickly than larger firms.

The nature of the technology used to make your product may often yield competitive advantages. If you employ individuals skilled in areas unique to your business, their skills will often yield cost advantages that may offset disadvantages in other areas. For example, your competitor may be further ahead in using computer-aided scheduling, but you are able to rely on specialists in your own firm and can market your product as a unique value while you move to minimize the technological differential.

Once you are clear about the areas in which you are ahead, assess your weaknesses. Having done this, you can develop a strategy that has the best chance of succeeding. Instead of simply trying to compete for customers on a single dimension, such as price, or to catch up in one area of technology, you are now able to consider alternatives derived from a combination of factors. You may, for example, see that a traditional competitor has an apparently insurmountable cost advantage from adopting a technology that yielded unforeseen benefits. An effort to compete strictly on the basis of price while attempting to catch up technologically is probably doomed to failure. On the other hand, a move into other product lines that take advantage of the skills used by your firm may give you a better chance for survival. Eventually, this strategy may give you the time needed to acquire the technology to compete in your original product area.

Finalizing a Plan

When you have a clear grasp of the competitors, customers, suppliers and situations you face, and you combine this with a realistic understanding of your own strengths and weaknesses, you can develop a strategic plan with a strong chance of success. You may decide that you have the strengths to compete with other businesses head-to-head in their best markets. You may choose to target a market that has not been touched by your competitors.You may see opportunities to influence local or state legislation in a way favorable to your needs. Or you may realize that you are constrained by a combination of circumstances that severely restrict your opportunities and leave you only limited chances for success. You should, however, under any of these scenarios, be able to make better choices.

Before you develop a detailed plan to implement, attempt to identify several possible alternative approaches. Frequently, when an individual or organization faces a problem or opportunity, solutions will appear to pop up. You've faced similar situations before, you have a gut feeling that the way to solve the problem is to. . . . While your first idea may, in fact, work, the odds are it won't be as effective as other possibilities. The reason that this obvious choice may not be the best option is that it is usually based on experiences that, while appearing similar, are actually very different. You may struggle a bit to identify other possible approaches. No alternative will be perfect. But once you have considered several and listed the advantages, disadvantages and overall chances of success for each alternative, you will be in a better position to settle on a plan with greater potential.

DEVELOPING A STRATEGIC PLAN (Pt 2)

Objectives to Achieve Goals

Accomplishing a goal requires establishing and achieving several specific objectives, which must:

• Be clear, concise and attainable.
• Be measurable.
• Have a target date for completion.
• Include responsibility for taking action.
• Be arranged according to priority.

An objective to the above-stated goal could require that the dispatcher develop a route structure capable of providing three-hour service to any area within 20 miles of the city's center, with the service beginning within six months.

An objective has to fit within a hierarchical network of other objectives that together contribute to the firm's ultimate goals and mission. For example, a subsidiary objective to the one mentioned above may be to purchase three new or late-model used delivery vans within five months. Another objective could specify expanding staff to drive the additional vehicles and to handle the expected increase in dispatching chores. This system of setting priorities is called a hierarchy of objectives.

Anthony Raia provides a list of guidelines to help you avoid pitfalls in setting objectives (Rue and Byars, p. 107). Some of the most important include:

• Adapt your objectives directly to organizational goals and strategic plans. Do not assume that they support higher level management objectives.
• Quantify and target the results whenever possible. Do not formulate objectives where attainment cannot be measured or at least verified.
• Test your objectives for challenge and achievability. Do not build in cushions to hedge against accountability for results.
• Adjust the objectives to the available resources and the realities of organizational life. Do not keep your head either in the clouds or in the sand.
• Establish performance reports and milestones that measure progress toward the objective. Do not rely on instinct or crude benchmarks to appraise performance.
• Put your objectives in writing and express them in clear, concise and unambiguous statements. Do not allow them to remain in loose or vague terms.
• Limit the number of statements of objectives to the key result areas (for your business). Do not obscure priorities by stating too many objectives.
• Review your statements with others to assure consistency and mutual support. Do not fall into the trap of setting your objectives in a vacuum.
• Modify your statements to meet changing conditions and priorities.
• Do not continue to pursue objectives that have become obsolete.

The formulation of a mission, goals and objectives is a complex, repetitive and continual process. As a small business owner-manager, your first reaction may be that you don't have the time or the resources to accomplish this. This may be true; however, you must develop a process that you can implement and be comfortable with. You will need to be aware of this process, the relationship of goals to ultimate performance and the need to be specific and consistent. A carefully thought-out set of goals provides the base on which the rest of strategic planning will proceed. The time you put into carefully assessing what you hope to achieve and how you will measure it will reduce the time required to assess and control performance.

Environmental and Industry Analysis

In determining appropriate goals, you will need to consider the position of your business within its industry and the broader business environment. Several trends may affect your business prospects. Examples may include shifts in population (e.g., the purchasing status of baby boomers), trends in the economy, technological developments, legislation (e.g., safety or antipollution regulation) and the activities of special interest groups. As you clarify your mission and goals, you will find that some factors are important while others may not require your attention.

There are several approaches to dealing with fluctuation and change in your business environment. James Thompson presents a list of general strategies that provides a good first cut at the complicated process of making strategic choices related to the business environment (Miner 1982, p. 147). He argues that most organizations search for certainty in an uncertain, fluctuating environment. Depending on the business' resources and the specific situation, a business may adopt one of four approaches to the business environment.

Buffering can be used when you have an abundance of resources, sometimes referred to as organizational slack. However, this is a luxury few efficiently run businesses enjoy. If, for example, you possess a technological edge, you may be able to relax your vigilance in the confidence that you have the resources to adapt to changes that may occur. You are then able to concentrate on other environmental factors that may affect areas of your business in which you don't have such an advantage.

Smoothing is a useful approach when you enjoy surplus resources in one area but your ability to meet demand is overtaxed in others. A good example is a chimney cleaning service that was unable to meet demands for chimney repair and service during the winter months, but had to lay off employees during the spring and summer months. In an attempt to change the environment, the owner developed advertising and pricing strategies aimed at attracting more business during slow times. In addition the owner assessed the skills of his employees. He found that by doing general masonry jobs in slow times, he could retain workers while actually increasing the size of his business. This example also provides a clear illustration of how a small business can manage, and even change, its environment.

Forecasting is something that all businesses must do. When you don't have the resources to use a buffering strategy or when conditions make smoothing impossible, you must anticipate environmental changes. The immediate need of most businesses is to monitor the competition. Other events that you can anticipate with an effective forecasting system include

• Technological breakthroughs.
• New competitors (either a company purchases in to your industry or a new competitor enters from an overseas market).
• Changes in the cost and availability of raw materials.
• Changes in consumer taste.

Effective forecasting is possible only when probabilities can be predicted; for example, you have a pretty good idea of what the odds are that shortages will occur in a raw material, or what the chances are that a law will pass providing new sources of assistance to small businesses. Unfortunately, many trends and changes are very difficult, if not impossible, to anticipate, even with the best forecasting system.

As a result you may find that you must resort to Thompson's fourth approach -- rationing. An unanticipated technological breakthrough or a sudden change in the spending habits of your customers may force you to reallocate resources. In this situation, goals may need to be delayed or foregone altogether, and parts of your business may need to be reduced. All needs of the business will not be completely met, but you will move to a base from which you will have the best chance to recover. With time you will rebuild to compensate for any losses incurred.

DEVELOPING A STRATEGIC PLAN (Pt 1)

Mission Statement

The first step in the strategic planning process is an assessment of the market. Businesses depend on consumers for their existence. If you are facing a rapidly growing consumer base, you probably will plan differently than if your clientele is stable or shrinking. If you are lucky enough to be in a business where brand loyalty still prevails, you may take risks that others cannot afford to take. Before you begin to assess the market, it is important that you complete a careful assessment of your own business and its goals.

The outcome of this self-assessment process is known as the mission statement. According to Glueck and Jauch (1984, p. 51),The mission can be seen as a link between performing some social function and the more specific targets or objectives of the organization. Another definition states that the mission statement is a term that refers to identifying an organization's current and future business. It is viewed as the primary objective of the organization (Rue and Byars 1983, p. 99).

Because these authors are writing for an audience of managers or would-be managers of larger businesses, their definitions may sound a bit lofty. If, however, you go back to the earlier example of a successful small business, you can see it started with a clear direction -- what was to be achieved and, in a broad sense, how best to achieve it. While your own goal may be to survive, make a profit, be your own boss or even be rich, your business must first perform a social function, i.e., it must serve someone. Given this you must determine (1) the ultimate purpose and (2) the specific targets or objectives of your business.

The investors of Franchise A discussed above clearly had determined they wanted a business with the potential for international sales. With this objective they were able to determine the kind of franchise they wanted and the terms. They knew that some goods and services were more likely to be marketable overseas than others. Early research helped them determine which areas of the world would be the best places to start. This, in turn, helped them to further narrow their list of potential products. Also, they were able to assess the financial demands of various approaches to overseas markets. Their financial analysis enabled them to affirm that a franchise would be one of the alternatives with a high profit potential. All of these directions were derived from an initially vague desire to go international. And, as the investors developed their ideas into a clearly defined business purpose, many issues were discovered that were critical to success.

Defining Your Business

A primary concern in defining a mission statement is addressing the question What business are you in? Answering this may seem fairly easy: however, it can be a complex task. Determining the nature of your business should not be strictly tied to the specific product or service you currently produce. Rather, it must be tied to the result of your output -- your social function -- and the competencies you have developed in producing that output.

Management theorist Peter Drucker suggests that if the railroad companies of the early 1900s or the wagon makers of the 1800s had defined their business purpose as that of developing a firm position in the transportation business, rather than limiting themselves strictly to the rail or wagon business, they might still enjoy the market positions they once did (Rue and Byars1983, p. 101). The obvious concern here is to ensure that you do not define your business too narrowly, leaving yourself open to economic changes or competitive challenges that make you vulnerable. The primary reason the service company mentioned earlier (Franchise B) failed was that it lacked a consumer base.These consumers were already being served by the current market.In another example, an entrepreneur developed a device to provide greater security for homes and vehicles. But, by focusing on the product rather than the service it was meant to provide, he failed to consider other services that already provided essentially the same level of protection at lower costs.

Your Firm's Philosophy

Once you have defined your mission statement, the next step is to define the firm's basic philosophy. Such a statement will help explain to your employees and associates how you would like to see the firm operate. Are you a risk taker, or would you prefer to build your business slowly from a solid base? How will you relate to customers, suppliers and competitors? What type of community involvement do you plan for your business, e.g., participation in recycling and volunteer activities? These questions, and many more, need clear answers to help your employees make operational decisions and conduct themselves in a manner consistent with your wishes. Much has been written about this concept in business literature under the term corporate culture. A clear explanation of your business's philosophy in the mission statement will provide a basis for the development of a consistent business culture.

Your Firm's Goals

The next step is to set clear goals to guide and maintain the business on a path consistent with its mission. Daniel Robey provides an excellent list of the key functions of business goals(Robey 1982). To summarize his comments, goals serve to:

1. Justify or legitimize the organization's activities.
2. Focus attention and set constraints for member behavior.
3. Identify the nature of the organization and elicit commitment.
4. Reduce uncertainty by clarifying what the organization is pursuing.
5. Help an organization to learn and adapt by showing discrepancies between goals and actual progress (providing feedback).
6. Serve as a standard of assessment for organization members.
7. Provide a rationale for organization design.

At one time, it was widely assumed that the owner of a company set that firm's goals. Glueck and Jauch refer to this as a trickle-down theory because it was assumed that others in the organization simply accepted these goals. Chester Barnard, believing that it was naive to assume such ready acceptance, suggested that organizational objectives arose from a consensus of the employees (Gleuck and Jauch, pp. 78<196>79). This trickle-up theory, however, is also naive in assuming that an organization is simply the sum of individual perspectives, and that it can achieve direction from an unguided and usually disparate group of people. Modern theories spring from combinations of these two approaches, suggesting goal development is a complex goal-bargaining process that enjoys some advantages of both basic theories.

Bargaining, while seeming a rather negative and poorly developed goal-setting approach, has the advantage of involving most, if not all, employees in the process. As a result, it is more likely that key concerns, internal as well as external, will be taken into account. By involving employees, you improve their understanding of and commitment to the firm.

Pierce and Robinson captured the complexity of goal setting in this statement:

• Strategic choice is the simultaneous selection of long-range objectives and grand strategy. . . . When strategic planners study their opportunities, they try to determine which are most likely to result in achieving various long-range objectives. Almost simultaneously, they try to forecast whether an available grand strategy can take advantage of preferred opportunities so that the tentative objectives can be met. In essence then, three distinct but highly interdependent choices are being made at one time. Usually several triads or sets of possible decisions are considered (Pierce and Robinson 1985, p. 231).

To improve the structure of this strategic approach, most experts suggest that a repetitive method be used in developing goals.

This begins with the owner and perhaps a few key employees agreeing on a long-term direction for the business and suggesting major goals in line with this direction. Then, other employees are asked to suggest specific objectives, which are then reviewed before being implemented. Goals become the shared purposes of the owner and employees and thus, it is much easier to get the support of employees and their clear understanding of what needs to be accomplished.

Goals are defined as broad, ideal conditions. A possible goal could be To become the leading small-package delivery service in the Kansas City metropolitan area. In defining goals it is important to understand (1) how the goal was derived and (2) how it provides guidance.

THE NEED FOR A STRATEGIC PLAN

Planning plays an important role in any business venture. It can make the difference between the success or failure of your business. You should plan carefully before investing your time and, especially, your money in any business venture. The following scenario -- “A Tale of Two Businesses”, best illustrates the need for a plan.

Individuals who had worked in management in much larger companies started two franchises (A and B). While Franchise A provided a product and Franchise B a service, the output of both franchise systems had been sold exclusively in the United States before the current owners became involved. The output of both was readily available in other developed countries as well. The franchises opened about the same time and neither franchisee had a strong market presence, nor do they at present. Today Franchise B is bankrupt. By contrast, Franchise A is selling products in the Midwestern United States and in Europe.

What was the deciding difference in the two franchises' success?You probably expect it to be that one had developed a strategic plan and the other hadn't; however, it isn't this simple. Many factors can influence the outcome of a business venture. There were many similarities between the franchises, but there also were many differences. Most notably, Franchise A sold a product and Franchise B a service (although this does not clearly limit options). Another difference was that Franchise A had a carefully thought-out plan. The investors knew as they looked for a franchise partner that they wanted to find a product that could satisfy international markets and a franchisor who would support that kind of sales effort. These investors were based in theMidwest, but negotiated for exclusive rights to export the franchisor's product. Once they had obtained the franchise, and as they began to establish their business domestically, they also began to contact government experts in the U.S. Department ofCommerce and the U.S. Small Business Administration, as well as educators and local managers with international experience. Clear plans were developed outlining how they would position, market and distribute the product and which foreign markets would be targeted first. Even as they were building sales in one European market, they were attending trade shows and planning entry strategies in others.

By contrast, the second investor (Franchise B) started his business strictly because he wanted to leave a former employer.Of course, many small businesses get started this way; however, in this case no investigation of franchising alternatives was done. The business was located in an area that, as it turned out, contained virtually no consumers for the kind of service being offered. When this mistake was realized, it was too late to move -- the investor simply did not have the money or the desire to risk starting again.

Other examples further show the need for strategic planning and for developing a clear business plan. The owner of a business that seemed to be doing quite well in two locations was about to open in a third. The authors were called in to develop a benefits policy and discovered cash-flow problems that could be found only after operations had begun in the new location. After analyzing the situation, an expansion and financial plan was developed for the sound locations only. In another case, the authors determined that a business had purchased more equipment than was necessary to accomplish the current workload. After careful analysis, plans to make further purchases were put on hold, and the equipment available was used effectively to meet immediate needs.

A business enterprise is too complex to assume that failure to develop a sound business plan will be the cause for problems.Nevertheless, this failure often counts among the factors contributing to business difficulties. As Worth has said, Being a business entrepreneur today takes constant vigilance in order to be able to take advantage of new opportunities and the availability of new information and technology as they come into being. The first step in doing this is to have a plan.

PROACTIVE VERSUS REACTIVE MANAGEMENT

A few years ago, you could establish and maintain a business by reacting to and meeting changes in tastes, costs and prices. This reactive style of management was often enough to keep the business going. However, today changes happen fast and come from many directions. By the time a reactive manager can make the necessary adjustments, he or she may lose many customers possibly for good.

Proactive planning is the anticipation of future events. Decisions are based on predictions of future states of the environment as opposed to reactions to various crises as they occur. Proactive planning in an unstable, technology-driven business environment is critical to continuing success in almost any endeavor. Rather than reacting to the situation as it changes, proactive planning requires that you analyze environmental forces and make resource-allocation decisions. By doing this you will take your business where it needs to be in the next month, year and decade. Barry Worth, a consultant specializing in small business management, puts it this way:

Today's entrepreneur must be a business architect. Anything built in today's business environment must have a step-by-step blueprint or plan on how to achieve success (Worth December 1989).

The blueprint for today's business owner is a business plan.

STRATEGIC PLANNING FOR THE GROWING BUSINESS

STRATEGIC PLANNING FOR THE GROWING BUSINESS

Scott R. Safranski, Ph.D.
Associate Professor of Management
Associate Dean, School of Business Administration

Ik-Whan Kwon, Ph.D.
Department of Management and Decision Sciences
St. Louis UniversitySt. Louis, Missouri


Emerging Business Series _________________________________________________________________
Copyright 1991, Scott R. Safranski and Ik-Whan Kwon. "How to Write a Business Plan." Copyright 1990, Linda Pinson and Jerry Kinnett.

All rights reserve. No part may be reproduced, transmitted or transcribed without permission of the author. SBA retains and irrevocable, worldwide, nonexclusive royalty-free, unlimited license to use this copyrighted material.

While we consider the contents of this publication to be of general merit, its sponsorship by the U.S. Small Business Administration does not necessarily constitute an endorsement of the views and opinions of the authors or the products and services of the companies with which they are affiliated.

All of SBA's programs and services are extended to the public on a nondiscriminatory basis.
_________________________________________________________________


TABLE OF CONTENTS


INTRODUCTION

THE BUSINESS ENVIRONMENT

PROACTIVE VERSUS REACTIVE MANAGEMENT

THE NEED OF A STRATEGIC PLAN

DEVELOPING A STRATEGIC PLAN
Mission Statement
Your Firm's Philosophy
Your Firm's Goals
Objectives to Achieve Goals
Environmental and Industry Analysis
Information Needs
Internal Business Analysis
Finalizing a Plan

THE BUSINESS PLAN

IMPLEMENTING THE STRATEGY

SUMMARY

REFERENCES

APPENDIXES
A. Self-Assessment Questionnaire
B. How to Write a Business Plan
C. Information Resources

_________________________________________________________________


INTRODUCTION

To many people, strategic planning is something meant only for big businesses, but it is equally applicable to small businesses.Strategic planning is matching the strengths of your business to available opportunities. To do this effectively, you need to collect, screen and analyze information about the business environment. You also need to have a clear understanding of your business -- its strengths and weaknesses -- and develop a clear mission, goals and objectives. Acquiring this understanding often involves more work than expected. You must realistically assess the business you are convinced you know well. Familiarity can breed contempt for thorough analysis; you cannot properly evaluate your firm's strengths or shortcomings.

_________________________________________________________________


THE BUSINESS ENVIRONMENT

Strategic planning focuses largely on managing interaction with environmental forces, which include competitors, government, suppliers, customers, various interest groups and other factors that affect your business and its prospects. Your ability as a small business owner-manager to deal with these groups will vary widely depending on the group and on the timing. For example, you may enjoy greater influence with your local government than with the federal government. In addition, you may be able to get more of what you want from a supplier than from a competitor (although size, distance, and the percentage of the supplier's business you represent and your record of dependability as a customer can affect this relationship). How you manage these and other relationships is one of the decisions you will make during the strategic planning process.

Because of major changes in the business environment, your familiarity with strategic planning and your ability to implement it is critical. At one time, business owner-managers assessed the environment on a continuum that ran between very stable and very unstable. Businesses, such as the producers of automobiles, furniture and other consumer goods, operated in a relatively stable and predictable world. This also was true of many service firms, such as banks and savings and loans. Typically, the environment included competition that was limited to a stable group of competitors, loyal customers and a relatively slow transfer of information. Many small businesses could thrive in this environment. Other small investors entered fields such as xerography, computers and computer component production, software design and chemical research. Some of these grew rapidly, becoming names with which we all are familiar: Xerox, IBM, Apple and Microsoft. However, many more failed.

Today, experts agree that more businesses face an unstable business environment. Improvements in information processing and telecommunications have made major changes in most industries. Along with this, improvements in transportation and the growth of foreign economies (specifically in Europe and Asia) have created a global marketplace and redefined certain industries. In addition, as consumers are exposed to more choices, loyalty has become less important than it once was; a slightly better deal or a temporary shortage of stock can easily result in the loss of customers. Competitors also can change rapidly, with new ones appearing from out of nowhere (often this means the other side of the globe). With the instability of the global market, it is important that you make strategic planning part of your overall business strategy.

Write a Business Plan

Strategic Planning
Too many people think strategic planning is something meant only for big businesses, but it is equally applicable to small businesses. Strategic planning is matching the strengths of your business to available opportunities. To do this effectively, you need to collect, screen, and analyze information about the business environment. You also need to have a clear understanding of your business - its strengths and weaknesses - and develop a clear mission, goals, and objectives. Acquiring this understanding often involves more work than expected. You must realistically assess the business you are convinced you know well.

In addition, strategic planning has become more important to business managers because technology and competition have made the business environment less stable and less predictable. If you are to survive and prosper, you should take the time to identify the niches in which you are most likely to succeed, and to identify the resource demands that must be met. Learn more about this topic.

Essential Elements of a Good Business Plan for Growing Companies
A business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan.

As any good salesperson knows, you have to know everything you can about your products or services in order to persuade someone to buy them. In this discussion, you are the salesperson and your products represent your business. Your customers are potential investors and employees. Since you want your customers to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.

To become an expert (or to fine-tune your knowledge if you already believe you are one), you must be willing to roll up your sleeves and begin digging through information. Since not all information that you gather will be relevant to the development of your business plan, it will help you to know what you are looking for before you get started. In order to help you with this process, we have developed an outline of the essential elements a good business plan.

Every successful business plan should include something about each of the following areas, since these are what make up the essentials of a good business plan:

• Executive Summary
• Market Analysis
• Company Description
• Organization & Management
• Marketing & Sales Management
• Service or Product Line
• Funding Request
• Financials
• Appendix

Writing The Plan
What goes in a business plan? The body can be divided into four distinct sections:

1) Description of the business

2) Marketing

3) Finances

4) Management

Agenda should include an executive summary, supporting documents, and financial projections. Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:

Elements of a Business Plan

1. 1. Cover sheet
2. 2. Statement of purpose
3. 3. Table of contents

I. The Business

• A. Description of business
• B. Marketing
• C. Competition
• D. Operating procedures
• E. Personnel
• F. Business insurance

II. Financial Data

• A. Loan applications
• B. Capital equipment and supply list
• C. Balance sheet
• D. Breakeven analysis
• E. Pro-forma income projections (profit & loss statements)
• F. Three-year summary
• G. Detail by month, first year
• H. Detail by quarters, second and third years
• I. Assumptions upon which projections were based
• J. Pro-forma cash flow

III. Supporting Documents

• A. Tax returns of principals for last three years Personal financial statement (all banks have these forms)
• B. For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
• C. Copy of proposed lease or purchase agreement for building space
• D. Copy of licenses and other legal documents
• E. Copy of resumes of all principals
• F. Copies of letters of intent from suppliers, etc.

Sample Plans
One of the best ways to learn about writing a business plan is to study the plans of established businesses in your industry.

Get Ready

Is Entrepreneurship For You?

In business, there are no guarantees. There is simply no way to eliminate all the risks associated with starting a small business - but you can improve your chances of success with good planning, preparation, and insight. Start by evaluating your strengths and weaknesses as a potential owner and manager of a small business. Carefully consider each of the following questions:

Are you a self-starter? It will be entirely up to you to develop projects, organize your time, and follow through on details.

How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers, and professionals such as lawyers, accountants, or consultants. Can you deal with a demanding client, an unreliable vendor, or a cranky receptionist if your business interests demand it?

How good are you at making decisions? Small business owners are required to make decisions constantly - often quickly, independently, and under pressure.

Do you have the physical and emotional stamina to run a business? Business ownership can be exciting, but it's also a lot of work. Can you face six or seven 12-­hour workdays every week?

How well do you plan and organize? Research indicates that poor planning is responsible for most business failures. Good organization ­ of financials, inventory, schedules, and production ­can help you avoid many pitfalls.

Is your drive strong enough? Running a business can wear you down emotionally. Some business owners burn out quickly from having to carry all the responsibility for the success of their business on their own shoulders. Strong motivation will help you survive slowdowns and periods of burnout.

How will the business affect your family? The first few years of business start­up can be hard on family life. It's important for family members to know what to expect and for you to be able to trust that they will support you during this time. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk in the short-term.

Why Small Businesses Fail
Success in business is never automatic. It isn't strictly based on luck - although a little never hurts. It depends primarily on the owner's foresight and organization. Even then, of course, there are no guarantees.

Starting a small business is always risky, and the chance of success is slim. According to the U.S. Small Business Administration, roughly 50% of small businesses fail within the first five years.

In his book Small Business Management, Michael Ames gives the following reasons for small business failure:

• Lack of experience
• Insufficient capital (money)
• Poor location
• Poor inventory management
• Over-investment in fixed assets
• Poor credit arrangements
• Personal use of business funds
• Unexpected growth

Gustav Berle adds two more reasons in The Do It Yourself Business Book:

• Competition
• Low sales

More Reasons Why Small Businesses Fail
These figures aren't meant to scare you, but to prepare you for the rocky path ahead. Underestimating the difficulty of starting a business is one of the biggest obstacles entrepreneurs face. However, success can be yours if you are patient, willing to work hard, and take all the necessary steps.

On the Upside
It's true that there are many reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.

• You will be your own boss.
• Hard work and long hours directly benefit you, rather than increasing profits for someone else.
• Earning and growth potential are far greater.
• A new venture is as exciting as it is risky.
• Running a business provides endless challenge and opportunities for learning.

How to Start a Business

How to Start a Business
Steps to Get Your Business Started

Starting your own business can be a challenging but rewarding endeavor. Planning for success is one of the best ways to ensure your efforts will be profitable. Before you establish your own business, make sure you've taken these essential steps.

Naming Your Company - Your company name is the first impression you will make on potential clients or customers.

Writing a Business Plan - A strong business plan shows potential investors you're serious.

Financing Your Business - Securing start-up capital is essential.

Choosing a Location - The right location is key to your success. Consider accessibility, size, and budget.

Establishing Your Business - Acquire the appropriate licenses to operate your business and choose the business entity type that best meets your needs.

CorpAmerica Can Help - We have experts standing by to help make your business ownership dreams a reality.

Next Steps - Success is never final. Arm yourself with knowledge.

Naming Your Company
Think of a name that is unique, and lets potential customers understand what you do. This will allow you to spend less money on advertising and marketing. Utilize a service like Register.com to choose a domain name for your online marketing. You should also consider filing a trademark to secure the name you've chosen.

Writing a Business Plan
Every budding enterprise should have a business plan to focus the direction, outline operations, and help secure investors. The more prepared you are before you start your business; the more successful it will be in the long run. Here are some essential elements of a strong business plan:

• Cover page-short identification and description of your business.
• Table of contents-allows readers to reference a specific section.
• Executive summary-overview of your total plan, outlining the steps you will take for success.
• Business background-highlights your skills and experience in the field.
• Marketing plan-details the products and services you're offering, your market, pricing strategy, and plans for marketing and advertising your business.
• Action plan-details the specific action-items you will utilize to create and deliver your products and services.
• Financial management, statements, and projections-source of start-up capital, monthly budgets, projected expenditures, expected return on investment, projected balance sheets, accounting strategy, and more.
• Operations-hiring procedures, insurance, leasing, equipment and other expected operational costs.
• Closing statement-confirmation of goals and objectives for a successful business.
• Appendix- statistical analyses, sample marketing materials, and resumes.

Financing Your Business
If you use your own money to start your business, you'll have more control over the cash flow and fewer debts to repay in the future. However, using your own capital may require you to start out with a smaller business.

If you plan to rely on outside investors, be prepared: Securing a loan or finding investors can take anywhere from two to three months, or longer. You may also be expected to contribute your own money to finance between 25-30% of the start-up costs.

Many small businesses receive funding from friends and family. When using this option, writing contracts to ensure everyone understands the inherent risks of investing is advisable.

Choosing a Location
Operating a home based business is one way to keep initial costs down, providing this is a feasible option.

If it's necessary for you to maintain an office or storefront, there are a few important things to look for.

• Consider rental costs, parking, accessibility, and the strength of the surrounding business community.
• Think about the size of the location, and whether it allows room for your business to expand in the future.
• Remember to budget for any potential renovations on your location, as the scope of work needed will impact your start-up costs and dictate how soon you can open for business.

Before finalizing your location, contact the local zoning office to ensure the space is zoned properly to allow your type of business. As a general rule, don't sign any contracts or enter into any verbal agreements until the most important details of your business are settled, including financing and licensing.

Establishing Your Business
The types of licenses required for starting a new business vary from state to state, city to city, and county to county. Before operating your business you need to ensure that you comply with the state, county, and local government agencies. CorpAmerica can help you identify the licenses and permits required for your business. By providing us with some details about your operation, our team of dedicated researchers can identify the license and permit applications your business needs.

Next, you'll want to establish yourself as a business entity. There are many reasons to establish a business entity; including protecting your personal assets and creating additional tax benefits.
Once you have established your business entity, you'll want to secure an Employer Identification Number (EIN), also known as a Federal Tax ID Number (TIN).

If you plan to have employees, it's a good idea to secure both unemployment insurance and workman's compensation insurance. Remember to prepare an employee handbook to set forth expectations and establish guidelines for your staff.

Next Steps
The Internet is a great tool for conducting your primary research. Simply type your interest into your favorite search engine... you'll find plenty of information. Other resources at your fingertips are business publications. Many titles are available to assist you along the way.

Fall In Love With Money

Fall In Love With Money
Change your feelings about abundance!
by S. K. Smith

You're probably familiar with the symbiotic relationship between the way we think and the way we feel. But did you know there is a mind-money connection too? It's not as simple as thinking rich to get rich, but there's no doubt you can impact your financial situation significantly with your thoughts. In fact, for better or worse, you already are!

The good news is, you can also shift your perspective when it comes to money and change your income outcome - quickly. So, if you're not satisfied with your bank account - or any other aspect of your financial profile for that matter - there's no better season than transformational autumn to shed your negative associations with wealth and "fall" in love with abundance!

L-O-V-E
No matter how much stress it causes you, attracting wealth begins with loving and respecting money. Now before you can say Who doesn't love money? (after all, we're all really great at spending it), think about the number of times you've complained about not having enough. "If only I could afford x, y or z [fill in the blank]" has certainly come out of your mouth at some time or another, right? In a world where we're bombarded with images of wealthy celebs and their possessions - and expected to live up to them - most of us voice these sorts of concerns quite often. We certainly think them, anyway.

While there's nothing wrong with wanting more money, first you've got to learn to really appreciate what you've got. Change those "not enough" statements to statements of gratitude. Whether it's the occasional Starbucks run, buying groceries, regular dinners out or the ability to go on vacation, most of us can find something to be grateful for. If you have to get really basic, the fact that you're in front of a computer reading this and can afford to keep a roof over your head is a great place to start saying thank you. It could be worse… and now, you're going to make it better.

R-E-S-P-E-C-T
Just like in a relationship, respect is vital to your new romance with money and its success. Consider the way you treat your earnings. Are you constantly worried that there will never be enough… so that no matter how much your income increases, you're somehow still struggling? Are you so fearful you won't be able to afford your bills that you simply ignore them when they arrive in your mailbox each month, letting them pile up until you have no choice but to look - and probably pay late fees on top of high interest rates? That's not treating money with respect. How do you expect it to flow to you when you're throwing it away or cursing it?

Laissez faire does not work for personal finance. Nor does seeing the glass as eternally half empty. Growth only happens in the areas of life that you give attention. Only those tasks which you approach hopefully will prosper. You can't expect to get what you don't ask for… Make it a point to know what you've got coming in and going out each month. Stay on top of your bills, sure, but also your daily and longer term spending. (Most banks and credit cards will do a breakdown of your spending by category per month, per quarter and even per year.) After all, only when you know where you're starting can you know where you're heading and how long it will take to get there.

C-O-M-M-I-T-M-E-N-T
Whatever you want your financial future to be, as in any love relationship, you have to commit to making it happen. That means not only setting goals and maintaining records, but keeping a positive attitude as you work toward achievement - and acknowledging your progress along the way.

Like any meaningful relationship, there are times when money is going to make you angry - but you have to recognize that ebb and flow is a part of life, love and abundance. Stick to your plan and in the meantime, trust that above all, you are not meant to struggle, you are worth being wealthy. Shed your fears that wealth is for other people, wealth will never come to you, wealth requires sacrifice (after all, you're not sacrificing by being responsible, you're accumulating) and take the responsibility for manifesting what's yours.

Get Rich

Get Rich
It may be simpler than you think

Does the idea of investing intimidate you? You're not alone. For many people, especially those without a real education in financial matters, investing is frightening. It seems complicated, but according to some experts, complicated is exactly what investing is not. You simply have to admit that getting rich is simple. It's just not easy.

If you've got a paycheck and some time, all you need is discipline and you can be a millionaire, according to some leading financial blogs. Now, depending on your situation, $500 can be a lot of money to save, but if you can discipline yourself and begin setting aside $500 per month, if invested well, in 30 years time you could have $1 million. If that's just too much (and you're certainly not alone if it is), here's a probable scenario if you can afford to invest $100 per month:

Say you start with nothing, invest $100 (of your income) a month (a healthy discipline), and let your money ride (over time) in diversified investments. Long term, the stock market returns at least 10% annually. Assuming a 10% return, you'd have $20,400 after 10 years, $76,000 after 20 years, and $220,000 in 30 years. That's a lot of money - especially considering all it requires of you is $100 per month!

It's not just the money you put away, it's the reinvestment (compounding) of the interest you earn on money you've set aside. For example, if you invest $1,000 and earn 10% interest on it at the end of each year, you'll get in $100 interest at the end of the first year. If you reinvest that interest, the second year you would start with $1,100, and thus would earn $110 interest. If you stay with it, you'd more than double your money every eight years!

"Compounding," Albert Einstein said, "is mankind's greatest invention because it allows for the reliable, systematic accumulation of wealth." But you don't need to be a genius to make this concept work for you!

Now of course there is risk involved - there's always the chance the market will go nowhere for the next 20 or 30 years and you'll end up no better than where you started. And the idea of waiting that long may sound silly anyway. But it beats your odds of winning the lottery.

Save More Money
A realistic approach

For the longest time, it seemed like all the big financial gurus started out their advice on how to save with suggestions like "cut out that morning latte." Sure, sounds simple enough, but for many of us, that morning latte or after work dinner with friends is what keeps us going amid the humdrum of the day to day. Really, if not for life's little pleasures, what is there right?

While a growing bank account sounds pretty sexy, for those of us who fit this particular description, it loses its appeal when it comes at the expense of having a life! Lucky for us then, that their are advisors like Suze Orman who never objected to getting your Starbucks fix in the first place). Below is just a taste of her advice on how to save money without affecting your quality of life… and it's simpler than you think!

It all starts with automation. The best way to avoid spending your money (and in turn, wind up saving it) is to have it taken it out of your take home pay.

Start with a 401(k)
Did you know that more than half of eligible employees aren't taking full advantage of their company's 401(k) match.? And a third haven't even signed up! Experts advise that you get in on that offer as soon as possible. Before you make any other decisions about investment (and don't worry, we'll be bringing you more advice from these pros throughout the week), elect to contribute at least as much as your company requires to get the full employer match - which is usually between 3% and 6% of your salary. If your company doesn't sponsor a 401(k), don't worry. You can create something similar for yourself by opening a conventional IRA, Roth IRA or SEP-IRA. There is an initial investment (check with your bank for specifics), but once it's set up, you can arrange for automatic transfers from your checking account.

"Raise" your savings!
One of the best times to increase your savings (and help it continue to grow) is after your annual review. When your pay goes up, save at least half of your raise. Have the chosen amount auto-deducted from your paycheck or bank account on the day your paycheck goes in and you'll increase what you're saving without cramping your lifestyle!

Once you set practical financial goals and make a plan for how to achieve them, you can apply the same principles of automated savings to other goals, such as building an emergency fund or saving up for tuition or vactions. Now get going!

Mix Up Your Money!

Mix Up Your Money!
More investing tips from experts

Studies show that it's not the specific stocks or funds that determine a portfolio's performance over time, but rather the combination of stocks, bonds and cash. Sound complicated? It doesn't have to be. As part of their 10 Finanical Resolutions, CNN Money experts advise people to mix it up when it comes to moolah. And the first thing they say is "Getting the right mix is not rocket science." Whew!

1. Begin by asking yourself the following questions:

How far away is the goal?
In the long run, stocks will most likely make you the most money, but they're a riskier choice. Do research to find out the specifics, but keep in mind when you begin that the sooner you'll need the money you've put in, the less you should hold in stocks.

How much risk can I handle?
Assess what you're comfortable with in terms of risk. Afterall, some investments fluctuate and a lot depends on when you decide to cash in on them. Know what you're getting into and how much up and down you can expect. For instance, fixedincome investments will smooth out short-term highs and lows, but give you lower returns over time.

What else do I own?
One of the most important things to consider when deciding how or where to invest is the total mix of investments you already hold. For instance (but not solely) your 401(k).

2. Use these rules of thumb:

Armed with a complete picture of your goals and expectations, determine what percentage of your portfolio should be in stocks.

If you want to be safe/conservative with your investments: Subtract your age from 100.

If you want to invest with moderate returns (a little riskier than the conservative option, but not terribly aggressive):Subtract your age from 110.

If you want to invest aggressively (bigger fluctuation, potential for biggest return): Subtract your age from 120.

Once you've done that, adjust your mix for when you plan to retire. The longer you can wait to tap your savings, the more aggressive you can be. So, CNN Money experts suggest increasing your stock allocation by one percentage point for every year you expect to work after the age of 65.

For the specifics of how to invest consult your finanical advisor.

Time Is Money

Time Is Money
How to work less and earn the same

It may be hard to believe, but some money experts say you need to take more time for yourself! You may feel like you don't have enough time for your family or yourself and you're not alone. Making time for yourself and your family was the top goal for readers of Money magazine in 2006.

Look at it this way, if your stress level decreases, it will allow you to make better decisions, and in turn, get ahead! Here's how:

Outsource
Identify your most time-consuming, least enjoyable chores, and get someone else to do them for you. Whether it's your kids doing chores or a service delivering your groceries at a cost of five or ten dollars, it's worth it. If your needs are bigger, use an online community bulletin board like Craig's List to find help (for instance with yardwork or getting things to storage).

Automate bill pay
Online bill paying is time-saving and cost-effective. If you're nervous, start with just one bill. Set up will take less than 20 minutes and once you're past this initial step, it's easy to add other bills to be paid at the push of a button. Aim to add one account per month or input the information as the bills arrive in the mail. By year-end you will be fully automated or close to it. Doing the same with a savings deduction removes all the thought from putting away money. And the result will be a bigger cushion for you!

Take a vacation
Some 30% of employees don't use all the vacation days they have coming. Make sure you're not among them. More work does not equal better work, contrary to popular practice! "Planning your vacation earlier allows you to time your workload and get as much done beforehand as you can," says Joe Robinson, author of the popular book Work to Live. It also allows you to coordinate coverage with your colleagues, commits you to a plan, and gives you and your family something to look forward to.

The experts also suggest paying in advance. You'll be more likely to actually take the time off if you'll be out of a deposit for cancellation. You'll come back refreshed and committed to getting ahead. You'll also feel less need to spend frivolously because you've given yourself a satisfying reward.

Really relax
While it's tempting, thanks to the breakneck pace we're used to, stop spending your free time the same way you spend work time - on the computer! Be sure to leave time on the weekend to do nothing or to engage in just one activity at a time.

Experts suggest you look for what researchers say characterizes satisfying leisure: engaging in activities that use our skills or challenge us, spending time outdoors or socializing with people we like. And for goodness sake, turn off the television, computer and gaming! Studies show that long hours spend in front of screens correlate to lower levels of overall personal satisfaction.

Meditation for Management

Meditation for Management
Zen training for execs

Do you ever think about becoming a better boss? You might consider mastering the ancient art of meditation where peace and prosperity do, indeed, come together. In Australia, some top level executives are finding their "Buddha nature" in the practice and disciplines of Tibetan meditation.

Recently, 28 top business leaders flocked to an annual Buddhist retreat, a two-day event led by Tibetan master Sogyal Rinpoche. The author of The Tibetan Book of Living and Dying, teaches these executives the ancient practice and disciplines of Buddhist meditation. And it's not just altering their consciousness, it's affecting their bottom line!

Attendee Gordon Cairns, CEO of Lion Nathan, told a New Zealand publication that he was "a horrible boss - driven by power, task-oriented and only concerned with getting the job done, whatever the cost" prior to beginning his meditation practice in 1999.

"That was bad for me and bad for the company - because really good people didn't want to work for me - and bad for my family. I'm glad to say that has changed," says Cairns who has now been on Boss magazine's "True Leaders" list two years in a row. He attributes this to meditation.

According to reports, between November 2000 and November 2004, with Cairns at the helm, Lion Nathan shares also rose by 109% and the company delivered total returns of 145%. He's since left the company and taken on a role as Director of Westpac, the Seven Network and Opera Australia, where people describe him as "affable," "likeable" and "easygoing."

The benefits of meditation have been known in the West for more than three decades with science increasingly showing the beneficial effect it has on the immune system, relieving anxiety and creating a greater capacity in the brain for happiness.

Other equally successful attendees of the seminar note their inspirational figures as Nelson Mandela, Mahatma Gandhi and the Tibetan masters themselves.

"Oftentimes, the compassionate answer or decision will be much harder than the ruthless or expedient answer," one reported.

"I would sooner follow someone capable of empathy, of listening and who had the company's overall interest at heart, than someone out for their own gain," said another.

Seems peace and prosperity do go hand in hand - even in business.