The Secret to a Successful Business Plan

The Secret to a Successful 

Business Plan

As a small business owner or future one, you will experience the opportunity to write a business plan. It is not an evil invention of the financial or business industry full of hoops to jump through to delay your dreams. It is a tool to help you evaluate your idea’s potential before you take to the bank or share it with other potential partners.

A business plan is the tool to help you see how feasible your idea is and if the local community or target consumer is ready for you. The great thing about a business plan is when you reach that stage, you already know a lot about the idea and it can simply become a way to write down what you know in an organized fashion. You get to realize the gaps you did not know about and start to fill them in with new knowledge.

Each plan is a custom one because no one business is exactly alike. All lady dress shops are not alike just as jewelry stores are not the same. Your business will not be the twin of the same concept down the street. With that in mind, you usually have three choices in writing the plan: 1) hire someone to do for you, 2) purchase business plan writing software or 3) write it yourself. It is strongly encouraged, you write it yourself to have the most knowledge of the plan and ideas and are better able to answer questions regarding the plan.

There are seven main sections of a business plan. The executive summary which capsulizes the plan and is written last is the first section. The second section is the business description where you talk about the industry, the company and the products/services to be offered to the target customer. The third part deals with marketing and how you plan on reaching the target customer. It is here you will show the need for the product/service and how many potential customers are in the market. A customer profile is usually included here also. Your pricing strategy is discussed along with your sales strategies.

The fourth part is a study of the competition. Competitive spying is legal as long as you do not break any laws according to the law books. You need to know who are your current competitors as well as any potential future ones who currently have no storefront but could be coming. The fifth section deals how you plan on managing the business and the structure. You will also talk about the management team. Every industry has its own set of risks so you need to address them in the sixth section.

The final section deals with financial projections and statements. You may want to enlist the assistance of a banker, accountant or a business counselor to help you prepare the necessary statements for this section. They are a balance sheet, profit and loss and cash flow and three years of projections.

A lot of research goes into writing a business plan to help make it a solid document so a potential funder will consider providing the necessary funds. As a small business owner, you are not alone in this venture. You have many resources to help you, bankers, accountants, business advisors and small business development counselors. All have the ability to provide assistance to help you move along in the writing.

Your local Small Business Technology Development Center business counselor is available to discuss your options and provide many services. All you need to do is call 573-243-3581 and ask for Richard Proffer. 

Funded in part through a cooperative agreement with the U.S. Small Business Administration. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA. Programs are extended to the public on a non-discriminatory basis. Reasonable accommodations for persons with disabilities will be made if requested at least two week in advance. Contact Richard Proffer, University of MO Extension, 684 West Jackson Trail, Jackson, MO 653755 or at 573-243-3581.

How to Keep Trade Secrets (Secret)

Small Business Trade Secrets

Every business, whether large or small, has a secret considered vital to success. It could be a family recipe for a meat dish that has a special spice or a new way to create a rubber product cheaper but yet it lasts just as long. Whatever it is, it is of value to the business and is often considered to be one of the most important assets when the business is up for sale.

Unfortunately, trade secrets cannot be easily and universally defined. The real definition comes from the fact the following three tests on the idea: is kept secret, is considered important and necessary for the business’s success and has a value to it. Those three tests must be met for a court to protect the trade secret in a legal issue.

A trade secret can be almost anything used in the business or created by the business as long as it is not generally known in the industry. For example, if a business owner creates a new recipe using pinto beans for a homemade chili, it will not probably be considered a trade secret because 1) chili is common, 2) pinto beans are common, and 3) most importantly, it is common knowledge you can use pinto beans in chili. What a trade secret does is provide the business owner with a competitive advantage and allows it operate a higher profit margin usually.

Trade secrets are treated differently than copyright or patents. As long as they are kept secret they remain valuable to the business. But that value can diminish when a competitor has figured out how to duplicate the process. Once discovered independently, the once trade secret can be used without any legal action being able to be taken unlike the copyright or patent. If obtained illegally, then the owner has the right to take legal action and claim damages.

How can a business protect its secrets? The first step is to determine what in your processes create a trade secret. Unfortunately, the information gathered in creating a product cannot be labeled as one as it usually represents skill or industry practices. Courts also protect an employee’s rights to carry with him his experience from one employer to another or her own business.

The second step is to write them down in a log and indicate who knows the secret. The business owner needs to make sure all the people on the log understand the importance of the secret to the business and they are not to disclose the information.

While no protection plan is entirely safe, the starting of one should indicate to the staff the owners are serious about protecting the secret and its importance to the business.

Your local University of Missouri Extension Small Business Technology Development Center can assist you in identifying and classifying trade secrets through its programs. For such assistance, please call 573-243-3581 and ask for Richard Proffer. 

 

Social Media becoming a Popular Tool for Small Business Development

Social media is becoming a huge tool for Small Business Development and even a bigger tool to stay connected with peers or colleagues. There is Facebook, Twitter, LinkedIn,  Blogging, etc. however, business owners aren't sure when or how to use social media to promote their business. Each social media engine is used for different sets of skills and different types of promotion. I found an article online that may be of help for business owners to improve their social media skills. This article discusses the differences between Facebook and Twitter and has good tips and advice for small business owners who are clueless to social media. Now, use these tools to help promote and grow your business.

Social Media Tips

Let me know of your thoughts on social media and small business development.

How to Start a Sole Proprietorship in Missouri

As a small business counselor I am always asked how to start a business in Missouri. This question leads me into a series of questions to help me understand where they want to take this business idea and the amount of risk they are willing to handle to get it off the ground. Once I know these answers, I can then be of maximum benefit to my clients.

So help the inquiring public that I do not see, here are a few tips on starting a sole proprietorship in Missouri.

Tip #1 - Your name or a fake name
As a prospective business owner, you have already decided that you are comfortable with the amount of risk you are undertaking. So you need to decide if you want to call this business by your name or use a fictitious name. If you use your name (meaning the checks go to you in your name) then you do not need to do anything at this point. If you decide to use a fictitious name, then you need to register with the Secretary of State office in Jefferson City or your local office http://www.sos.mo.gov/. This link is to the state website in Missouri. It is a fake name if you add anything to your name like Jane Doe Plant Care Service because no mother hopefully has named her child by that name. 

Tip #2 - Getting the State Number
Once registered you are ready to get your first license - the Sales Tax & Use Permit. This license allows you to collect sale tax where applicable and submit it to the state when due. This form comes from the Missouri Dept of Revenue http://dor.mo.gov/ and you want the Form #2643.  Here you will need a bond to cover your sales tax so don't be over eager in estimating your sales tax but do be comfortable with your estimate. You know the old saying "give unto Ceaser what is Ceaser's..."

Tip #3 - Getting the Federal Number
Now you are on a roll and gaining speed in registering your business. The next step is to get your Federal TIN/EIN number. This number replaces your social security number for the business because as you do business, you will be asked to provide either your TIN or SSN with vendors. In this day, you know the risks of giving out your SSN to anyone you don't know. So go online to http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-(EINs) and fill it out. It takes about ten seconds and if you do it by mail, it could take weeks.
Every business owner needs this number but as a sole proprietor, you are not required to get it but it will let you sleep better at night by not giving out your SSN to every Tom, Dick or Harry.

Tip #4 - Setting Aside for all the Necessaries
Next comes the forms for the employee taxes, unemployment, immigration, worker compensation and etc. Let's take each one and break it down.

Withholding Tax

If you are the sole proprietor and have no employees, then you do not need to worry about this one. If you hire anyone else besides yourself to work for you, then you need to file it. This is a state tax so you will need to go to http://dor.mo.gov/business/.  This webpage will show you when the taxes are due and the necessary forms to fill out and even file electronically or snail mail them.

Social Security Tax

If you are the sole proprietor and no employees then don't worry. But if you hire someone, then you got to follow through. This website will get you started http://www.irs.gov/Individuals/International-Taxpayers/Social-Security-Tax---Medicare-Tax-and-Self-Employment. 

Unemployment  Insurance

As a sole proprietor you will not need to worry about this one also unless you employ anyone besides yourself. Go to this website http://www.irs.gov/Individuals/Employees/Unemployment-Compensation to get the details on what you have to do if you have any employees. Otherwise check it off as something not to worry about until you grow someday.

Immigration  Form I-9

Again you do not need to worry about this one unless you hire someone. All hired employees and contract laborers need to be "I-9'd" to protect you and them from violations. The website for this action is http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=31b3ab0a43b5d010VgnVCM10000048f3d6a1RCRD&vgnextchannel=db029c7755cb9010VgnVCM10000045f3d6a1RCRD.  So like many of  the others, if you don't hire, don't worry.

Workman's Compensation

 As in the other cases, you have a website to go to here to help you also.  It is http://www.dol.gov/dol/topic/workcomp/. The change here is if you have five or more employees you need to carry this insurance unless you are in an industry that is considered high risk.  To see if you are in the high risk industry listing, call 573-751-3365 (Mo Dept of Property & Casulty) and ask them.

Tip #5 - Now for the Locals
Depending on where you are operating your business, you may need to get a county and/or city business license and update your assessment for the added value of the business. So you want to start with the county assessor office to see if you are affected by this change in status. If you are, well then make it happen. If you are not, well you got by that one.

Then you will need to obtain the local licenses. You got your state sales tax permit already now you will need the county and maybe the city licenses depending on where you are operating this business. Start out at the county clerk office and let them guide you through their process. Every county probably has a few unique tweaks to it so start there and follow their suggestions. You will receive a piece of paper you will need to display for people to see authorizing you to collect the county sales tax.

Then if you are operating in a city, you will need the city sales tax permit. So go to city hall and talk to the city clerk there. Same process as with the county clerk just different place. You will get a certificate authorizing you to collect tax for the city.

Now you are ready to hang your shingle and start selling goods and services.

Hopefully these links and suggestions will help you as you go about starting your business. Let me know your questions or thoughts.

Short & Sweet for me Anyway

I just recently attended the national conference for NACDEP (National Association for Community Development Extension Professionals) in beautiful uptown Park City, Utah.  There I got to see old friends, try new restaurants, meet new people, network and learn new ways to do my job. 

At one of the sessions, a thought hit me that I am constantly telling my clients to do - work the room. I mean it - I tell them to start pressing the flesh and making contacts.  So what was I doing - sitting there like a lump on a log at this table and not networking.  This realization kinda crept up on me. People would come over and we chit chat and do the conversational pleasantries but never did we network. Talk about what is happening, get to know each other or better how could we help each other.  We did not do that. 

Then this attendee from Trinidad came over and sat down and started talking to me.  At first I was uncomfortable since he had invaded my space (cultural difference) but he was very polite and very quickly drew me out of my shell.  We started talking about why they were here, what they hoped to get out of the conference and then bingo - out came the question. He asked me about a problem they were having in community economic development in his home country and wanted to know my take on the situation.  Man he had me hook line and sinker (lol - inside joke that some of you will get). 

We started talking about possible methods to implement change, the culture and other opportunities. I even hooked him up with some other conference attendees that I knew had experience in his questions.  We got to know each other, really talk and share about our fields of work. 

As we wrapped up the conversation and parted, it hit me like a lead balloon. I was not practicing what I had been preaching to my clients. I was sitting there, avoiding talking to people and checking emails or whatever I could do on my blackberry to appear busy.  I was so disappointed in me. 

Our conversation prompted me to start networking and getting out from under my shell.  I also watched him during the convention and man he was good. He knew how to work a crowd and I saw him doing more network trades than the NYSE floor traders.

The next time I counsel my clients on networking, I am going to think back to this instance and remember.  I can't get lax on this because networking is one of the best ways I get leads for clients or referrals. 

So the next time you are at a meeting, put down the phone, get up and shake a few hands and start asking questions.  You will never know what will come of it.

Year End 2011

I will keep this short and sweet.  Wow what a year.  We have taken in over 200 new clients, prospects and projects - a first for my office.  We have worked with people who want to start farming operations, trucking operations, retails stores, bakeries, restaurants and many other businesses.  We have helped inventors find their way to research partners which have helped them move along the invention path.  We have helped local residents decide that becoming an entrepreneur was the way to go and for some the way to not go. I had to say goodbye to a peer who left us for a better future and I got to say hello to an old peer who became a new peer thanks to how Extension does it hiring.  Our classes did not really take off in 2011 but we brought informative programming to those who did attend.

In 2012, I look forward to a new year, new people, new ideas.  I welcome it because I have always enjoyed trying to provide the solution to the puzzle and in 2012, I think we will have a lot more puzzles to solve. We already have new programming on the books - our Small Business Growth Series and partnering with other area agencies to see what we can do together instead of seperately.

So best wishes and look forward to more posts.