Step 1: Create a Business Plan That Clearly Maps Out Your Road to Success
Creating a business plan is an important first step in transforming a business idea into a successful company that sells a product or service. It forces you to examine your market and tailor your product or service to satisfy an important need. This planning process also leads to a firm realization of your business milestones and what is required to accomplish each one. Creating your financial statements will verify to yourself and others that you have a business idea worth pursuing.
Your business plan needs to describe your product or service and how there is a tremendous demand for it.
Having a good product or service is not enough. You also have to have a well-thought-out marketing strategy to attract and sell buyers. A summary of the existing market, your competition and your plans for competing and excelling in your market sector needs to be convincing and exciting.
A description of your management team will be one of the most important sections in your business plan. Investors need to be convinced that your business team has the skills and experience to accomplish your business goals.
To successfully raise money, your business plan must contain financial projections that clearly demonstrate that your company will generate significant profits over the next four or five years. They also have to show that you have a firm grasp of projected revenues, costs, cash flow and profits.
When you are creating a business plan, you need to describe your exit strategy. Angel investors or venture capital firms want to know up-front when they will be able to cash out of the business and move on to the next deal. Most investors have a four-to-five year investment time horizon.
Step 2: Write an Executive Summary That Compels People to Want To Look at Your Business Opportunity in More Detail.
Writing a concise and compelling executive summary is an absolute must if you are trying to raise money or attract people to join your new business. Most people don’t want to wade through a long and detailed business plan until they’re sold that you have an interesting business opportunity that could make a lot of money.
Your executive summary will distill your business plan into a concise description of your business opportunity, your management team, your marketing plan and the financial rewards that will be reaped if your plan is carried out.
Step 3: Assemble a Top-Notch Management Team.
Most successful new businesses owe much of their success to the skills and experience of their management team. Investors will rarely invest in a business idea unless there is a good management team in place. Be sure to check out the page in NewBusinessCreator.com that describes how to assemble a top-notch business team.
Step 4: Choose Your Business Entity.
Choosing the correct business entity can make the difference between being able to raise business capital and ending up empty handed. Certain business entities can also expose you to significant personal liability. The following is a link to get more information about choosing the right business entity.
Step 5: Register Your Fictitious Business Name (if applicable).
You are required to register your business name, unless you use your legal name, the name of your corporation or your limited liability company.
When you register your fictitious business name, you are informing the government and the general public of the company name that you are “Doing Business As” (DBA).
Once your fictitious name is registered, other businesses are prevented from using this name in the government jurisdictions you are registered with. A DBA does not prevent businesses from using your fictitious name in areas outside these areas. You need to register for a trademark in the country or countries you plan to do business in if you want to protect your business name in the national or international marketplace.
In most cases, you register your fictitious business name at the county clerk’s office in the county in which you do business. There are some states that require companies to file a DBA at the local, county and state level. In some areas, such as California, you also have to publish a notice of the fictitious name in a local newspaper for a certain period of time. The simplest way to file a DBA is by using a firm such as LegalZoom.com.
The following is a link to more information about the requirements, benefits and limitations of registering your fictitious business name.
Step 6: Get Protection for Your Business Idea and Your Business Brand
Getting a utility patent or a design patent is an absolute must if you have a business that has a product that depends on intellectual property rights to protect your completive edge in the marketplace,.
Once you have a registered patent you can prevent others from infringing and profiting from your idea, without your permission. The following is a link to more information about getting a utility patent.
It takes literally one to three years to get a registered, nonprovisional utility patent issued from the US Patent Office. Learn how to preserve your patent rights by getting a patent pending or a provisional patent while you are writing and applying for your utility patent.
Over the years, you will be spend lots of time, effort and money marketing your company’s brand. Brand loyalty will translate into your customers always searching for your company’s logo that they’ve grown to trust. As a result, a popular brand is like money in the bank. Learn how to get a registered trademark or service mark to protect this valuable asset.
Items such as websites, software, books, articles, movies music, art, poems or novels, can also have significant commercial value. Learn how to get copyright protection to prevent others from profiting from this potentially valuable intellectual property.
Step 7: Set up a business checking account.
Once you’ve established your business entity and fictitious business name, you can set up a business bank account.
It is important to have a separate business bank account in order to prevent co-mingling of your business and personal funds. This will make it much easier to track your business earnings and expenses. It also helps simplify tax preparation at the end of the year.
Step 8: Raise outside business capital.
The two most common sources of outside business capital for startups are SBA loans and angel investors. One of the biggest advantages of getting a business loan is that it won’t dilute your ownership share in the company.
SBA loans are an excellent source of small business funding. One reason is that they usually have much lower interest rates and terms compared to conventional loans because they are guaranteed by the Small Business Association.
When you apply for an SBA loan, you need to understand that you don’t submit an application directly to the SBA. SBA loans are instead dispensed by banks and other special finance companies.
Previously, the main source of SBA loans for small businesses were community banks. This source of SBA loans has drastically declined as a result of a large number of community banks going out of business over the last twenty years. At the same time, the large banks that now dominate the banking industry do not want to bother with small business lending. The good thing is that non-bank SBA loan providers are rapidly filling the void in small business lending. The following is a link to Newtek, the leading non-bank SBA lender in the United States.
In the United States, angels provide 90% of the equity seed capital for startup companies. The following is a link to more information about how to raise angel capital.
A successful angel investor pitch contains much of the same information that is in the business summary and in the business plan. However, the format is completely different. The following is a link where you can learn more about how to create an effective angel investor pitch so that you can get the business funding you require.
Step 9: Market Your Product or Service
Marketing is a critical component in achieving business success. There are a variety of marketing strategies that can be employed to successfully market your product or service. One option is to find product distributors to take over this important role. Another option is to hire sale agents to market and sell your product or service. The internet also provides a number of good marketing options for selling your product or service on the world-wide-web.
Step 10: Constantly Update Your Business Plan In Order to Adapt to The Ever-Changing Marketplace.
As you proceed with your business, you’re going to discover that many of your assumptions and beliefs about your customers, your competition and the market place will change. Because of this, you will be forced to continually evolve your product or service and your marketing strategies to adapt to your market. As your company matures a transformation of your management and personnel will also occur.
In many ways executing a business plan is like going into a battle. In a battle, almost nothing goes the way it was originally planned. This is also true when you are in business. For example, you might run into regulatory hurdles that you were not expecting. You could encounter a competitor that recently launched a product similar to yours. Marketing strategies and sales strategies almost always have to be tweaked and changed after getting customer feedback, or after analyzing their effect on sales. The list of things that can throw a wrench into your original business plan is endless. As long as your business plan is dynamic, flexible and constantly updated, your business will survive and prosper.
Always remember that the winners in business are the ones that can adapt to the ever-changing marketplace. That’s why you have a management team. Their job is to constantly be analyzing what is working and what is not. To find solutions. To locate new opportunities.
One of the valuable features of LivePlan business planning software is that it facilitates collaboration of your management team on your business plan. You choose who sees what. It’s easy to manage permissions and allow specific collaborators to see and work on only the part of the business plan you want them to see.
Step 11: Consider Franchising to Rapidly Expand Your Business
Do you have a strong brand? Does your company have a proven system of doing business that could be successfully duplicated almost anywhere? If so, franchising might be your best choice for rapidly expanding your business.
There are many advantages to using the franchise method for raising business capital. One big advantage is that you don’t have to have shareholders or give up equity in your parent company. You also can avoid having to put up collateral for a loan.
With the franchise method, you raise business funding by collecting franchise fees from your franchisees. Money starts really rolling in after you establish your franchises. This is when you start earning royalties consisting of a percentage of the gross or net income generated by each franchise location.
Royalty fees are not the only way you can generate profits from your franchise business. Many franchises require their franchisees to purchase ingredients, finished products or services from the parent company.