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Monthly Archives: December 2016

5 Trends Fueling Big Growth for Small Business

Propelled by access to new technology, a changing workforce and easier opportunities to reach a larger audience, small business growth is expected to skyrocket in the coming years, new research finds.

According to a study from Intuit andEmergent Research, the number of small businesses are projected to increase to 42 million by 2026, up from this year’s 30 million. The 3.3 percent annual growth rate over the next decade is significantly higher than the 2 percent average growth between 2004 and 2014, the most recent data available.

While the number of small businesses will grow over the next decade, their size is actually getting smaller. The research found that the average size of small businesses dropped by 20 percent between 2001 and 2014. Specifically, in 2001, the average small business started with 6.5 employees. In 2014, the number shrank to just four employees.

“The next few years will see an acceleration in the number of small and micro businesses, thanks in large part to new technologies that reduce the costs and risks of operating a small business and open up access to customers around the world,” Steve King, a partner at Emergent Research, said in a statement. “While running a business is always going to be tough work, economic and technological changes are making it easier and cheaper to start and operate a successful small business.”

The study’s authors highlight five key reasons that will not only fuel the growth of small businesses, but will allow them to compete with big businesses like never before.

  1. Top-notch technology: Small businesses now have the ability to build sophisticated business and technology infrastructures that previously were only available to large companies. Cloud computing and manufacturing and distributing capabilities are now available with a cost structure that allows small businesses to scale up and down and only pay for what they use.
  2. Deeper insight:  Access to insightful data is giving small businesses the capability of gaining deeper customer and business insights. Access to machine learning has taken away much of the complexity of data analysis, which allows small businesses to make faster and better decisions.
  3. The on-demand workforce: By the year 2020, freelance workers are projected to represent 43 percent of the workforce. This gives small businesses access to the right people at the right time in a flexible way, without the responsibility of hiring traditional employees.
  4. Online marketplaces: Online outlets are giving small businesses the ability to not only sell more niche products and services, but also to extend their reach to millions of customers that they previously never had access to.
  5. Affordable advertising: Online advertising has made it cost-effective to connect with customers worldwide. For a fairly low cost, small businesses can deliver their targeted messages, whether it be a sponsored photo or in-stream video ad, to a whole new audience.

“This next decade will be the decade of the small business,” said Karen Peacock, senior vice president of small business at Intuit. “Industry-shifting trends like lower-cost, scalable infrastructure to start and grow your business, the ability to build a team with amazing on-demand talent, and data that helps you fuel your business and delight your customers are game changers.”

7 Surprising Things Every Business Plan Should Include

If companies focus only on themselves in their business plan, they are making a big mistake. Businesses should use their business plan partly to address the competition and how their idea differs from what’s already out there, said Steve Martorelli, CEO of Turnkey Processing, a payment processing provider.

“First, identify your X factor — what can you do 10 times better than your competition?” Martorelli said. “Next, test your hypothesis by talking to potential customers. Do they value what you are proposing to offer them as much as you think they do? Finding the answer to these two questions is the most important planning anyone can do.”

Companies that value innovation must make it a priority from the start. Your business plan should highlight the ways in which your startup will be original and groundbreaking, said Amy Hutchens, business strategist and CEO of AmyK International, which specializes in executive development.

“Innovation must be a critical component of every business plan,” Hutchens said. “By making innovation part of the plan, the process becomes intentional, not reactive or accidental, and sets the stage for a culture of creativity and innovation for the long run.”

It is highly unlikely that everything about your business will go according to plan. Justin Palmer, founder and president of HomeLife Media, which operates pet-focused websites, said entrepreneurs should have a “contingency plan” that allows them to make any necessary business-model changes should something not go as anticipated.

“An example of a contingency might be, ‘If we do not have 1,000 paying customers within six months of operations, we need to shift product focus,'” Palmer said. “A metric such as this is especially vital if your business operates on the Web or builds software. A business plan is great, but there’s no point in sticking with a failing plan for too long.”

On the other hand, businesses also should prepare for unexpected success. Your business plan should account for normal scenarios as well as highly successful, best-case scenarios, said Elle Kaplan, CEO of LexION Capital Management.

“When I started my business, I was in no way prepared for the success and level of growth we obtained,” Kaplan said. “I should have planned bigger and prepared for faster growth versus being surprised and having to rework my plan.”

A typical business plan will discuss a company’s target market, usually in terms of demographic information such as age, gender and income level. However, businesses should consider looking even further to define their target customers by factors such as lifestyle, needs and desires, said Amber Goodenough, co-founder of fourfour media, a Web design and development company.

“Psychographics ― customer values, lifestyles, habits and interests ― give you a deeper insight into your customers’ needs, wants and frustrations, which then helps you create products and services that really meet those needs and solve their problems,” Goodenough said. “The better you do that, the more money you make.”

As social media remains a dominant force in marketing and customer engagement, a business plan needs to highlight how the company will use social media to its strategic advantage, said Stephanie Ciccarelli, co-founder and chief brand officer at Voices.com, an online marketplace that connects businesses with voice-over talent.

“No business plan should be without a section dedicated to the use of [social media] as part of their marketing efforts and channel for supporting and engaging customers,” Ciccarelli said. “These efforts may also tap into a company’s advertising, search engine optimization and customer service efforts.”

If your business is going to have employees, you’ll want to spell out how you’re going to keep them engaged and focused on their responsibilities, said Bill Rosenthal, CEO of Communispond, a provider of employee skills training. “The plan must include ways to show employees [that] their well-being aligns with that of the company,” Rosenthal said. “Establish metrics for everyone’s performance, and spell out the rewards for meeting the metrics.”

7 Free Business Plan Templates for Startups

Luckily for entrepreneurs, there are templates out there that allow you to plug in all of the information, instead of struggling with formatting and figuring out what you need to include. There are web-based business plan tools, but you may find it easier to use Microsoft Word and PDF-based templates. Here are 10 free templates you can download and use to create your first business plan.

Bplans.com, known as the authority on business plans, offers a free Word business plan template, complete with instructions and a table of contents. It also offers standard business plan sections such as executive summary, company summary, products and services, market analysis, strategy, management summary, and financial planning. Once you register, you will be able to download the materials and choose from a wide range of businesses in different industries in which to base your plan. Whether your business is online, service-based, or a food establishment, Bplan’s Word business plan templates are comprehensive and are a great option for beginners and new business owners.

Entrepreneur.com provides business tools, with a collection of business plansfree in PDF, PowerPoint and Word. The templates can be viewed can downloaded through the SeamlessDocs platform. The site includes a template for a variety of specific business types, a business plan model that outlines the different parts of a business plan, and customizable templates that allow users to add their logos and business information. If you need a guide to writing a business plan, Entrepreneur.com also provides a download for that.

This step-by-step business plan builder, offered by Law Depot, covers structure, product marketing, SWOT (strengths, weaknesses, opportunities, threats), operations, and details specific to your business in their templates. Once the template is complete, you can download and print. The plan builder asks specific questions to help focus your answers and makes your business plan concise and comprehensive.

MOBI, or My Own Business Institute, is part of Santa Clara University’s Center for Innovation and Entrepreneurship. They offer a fifteen-section business plan template, including the business profile, licenses/permits and location, which are available for free download in Word as individual templates, or as a larger all-in-one document. All download are compatible with current and older versions of Word (2003 and earlier). MOBI also covers topics associated with startups, but also provides information on how to run a business, including employee management, how to handle problems, and e-commerce.

Office Depot

Office Depot’s Business Resource Center contains free business plan samplesfor retailers, manufacturers and service providers. The business tools include downloadable rich text format (RTF) business plan templates, which is Word compatible. Excel business plan financials are also available for manufacturers and service providers, while the retailer business plan template is complete with forecasting and financial tables, but this requires Microsoft Word version 6.0 or later.

Catering to businesses owned by women, Oprah.com’s free one-page business plan templates can be used by anyone who wants to start a business. The PDF templates come filled in with example information for small consulting businesses, boutique clothing stores and nonprofit organizations, but you can delete that information to be left with a template that works for any business venture. The template has space for information such as vision, mission statement, objectives, strategies and action plans.

When you create a free business plan with Rocket Lawyer, you get the advantage of an attorney’s advice to make sure your document is legally sound. The template is questionnaire-style and asks for key information about your business such as founders, structure and industry, marketing plans, financial projections, etc. Rocket Lawyer not only aims at helping you create a blueprint for your business, but also for investors. Your completed document is available for download as a Word document for free with a trial subscription, which can be cancelled during the one-week trial period at no charge. The document is $10 on its own without a subscription.

5 Fast Fixes to Jump-Start Your Business Plan

Before you start writing your business plan, you need to make sure your business idea or product is actually desirable to your intended customer base.

“Many entrepreneurs come up with a great idea without stopping to think if they are solving an actual problem for a group of people,” said Jenny Leonard, CEO of digital agency Never North Labs. “You don’t want to spend months or even a year working on developing a business or product idea only to find out nobody cares or even wants it.”

Leonard said you should spend some time researching your customer base by actually speaking to people your product or business idea would target.

“You’ll quickly find out just by talking to a few dozen people if your business idea or product is a hit or a miss,” Leonard said. “It may be a little extra work early on, but it will save you potentially hundreds of hours in the future by doing this work first.After doing this bit of research, you’ll have the clarity you need to write your business plan.”

So what’s the first step in actually writing your business plan? Startup consultant Kristi Klemm said the first thing you should do is ask yourself, “Who am I making this plan for?” There are usually two answers to this question, Klemm said: You’re writing it to fit your own needs, or you’re writing it for investors or partners.

“It’s important to recognize when someone wants a business plan for their own needs,” Klemm said. “This indicates the person usually desires structure, and getting their motivations for starting a business on paper — or [on a] screen — is an important step for them in order to begin working [and] to acknowledge the business is really happening.”

This type of plan tends to be less reliant on outside data, functioning mostly to set into motion the actions needed to get the business off paper, and operating, Klemm said.

“It’s more of an expansive-yet-broad to-do list for the next 12-24 months,” Klemm said.

If you’re making your business plan for investors or partners, it should be very analytical, and include a lot of competitive and market research, with money-asks clearly defined and term sheets as detailed as possible, Klemm said.

“You’re already convinced the business is going to work. Now you need someone else to believe in you,” Klemm said.

A great way to simplify your business plan, both for yourself and your investors, is to make it more visual. Zack Pennington, chief operating officer at online music instruction resource Collabra Music, said you shouldn’t be afraid to use charts in place of long text paragraphs.

“Sometimes, people get too hung up on trying to explain their business model or cost assumptions in words, when a simple table, pie chart or flow chart can do wonders,” Pennington said. “Investors spend countless hours reading business plans, and if you use a chart that makes it simple and easy for them to understand what you do, you’re significantly more likely to hear from them.”

Pennington also noted a change in the way many business plans are being created.

“It’s OK for your business plan to look more and more like a slide deck, since that’s where most business plans are heading,” Pennington said.

When you’re creating your business plan, you also have to think about the time it will take you to reach your goals. Lora Ivanova, co-founder and chief marketing officer of at-home STD testing company myLAB Box, said that it’s key to ask yourself about your time line or personal runway.

For example, “How long can you and the people on your team — co-founders and anyone investing sweat equity — commit yourselves [to] full-time [work] or any meaningful capacity [dedicated] to your business?” Ivanova said.

Once you have that time frame, Ivanova said that the second most important question is, “Is that enough time, conservatively, to get your business to a place where it can sustain your ongoing commitment?” Or, in other words, “At what point in time can your business provide enough income for you to keep working on it?”

From there, you can figure out what goals you need to achieve and how to achieve them.

“Depending on any gap between your runway and revenue, your business plan’s primary goal will be to bridge that gap with tangible solutions,” Ivanova said.

She also suggested creating a business plan for your best- and worst-case scenarios.

“Looking at them side by side is a great reality check,” Ivanova said. “At the end of the day, any business plan is irrelevant if you, the founder [that the business’s] success hangs on, cannot sustain your livelihood to keep building.”

Business plans are important, but it’s also important to remember that not everything will go according to plan. That’s why you need to keep your business plan flexible, said Cindy Jones, CEO and formulator at skin-care company Colorado Aromatics Cultivated Skin.

“Many people get too hung up on a business plan, and it slows them down,” Jones said. “It doesn’t have to be perfect. Flexibility is important.”

Jones noted that her own business plan has changed a lot since she started her company.

“My original business plan evolved so much that it is not recognizable,” Jones said. “This is because areas of my business that were minor parts of my business plan, because I never expected them to grow much, actually took off more than expected. This meant my focus had to change somewhat and resources needed to go to that area.”