The LGBT Entrepreneur 10 Steps To The Perfect Business Plan

Every business needs a plan. Your business plan will keep you focused and help convince investors to lend you money. But what needs to go into the perfect business plan? Here are 10 steps to help you get it right.

Why do you need a business plan?

OutBuro - 10 Tips - Business Plan LGBT Entrepreneurs Startup Business GBLT Professionals Gay Lesbian Transgender Bisexual Community Job Postings News Information JourneyYou may be wondering why you need a plan in the first place. After all, you have a clear idea in your mind about what you want to achieve. You know the market, you have the necessary skills. So why do you need a plan?

There are many good reasons. Here are just a few of them:

  • To clarify your ideas
    Writing something down gives it structure and substance. Your ideas will be clearer on paper than in your head.
  • To discover and solve problems
    The business idea you have in mind may have some holes – you might not have covered everything. This will become much more apparent when your words are on the page.
  • To get feedback from others
    A properly written business plan can be shared with trusted people to get their advice.
  • As a formal document
    Banks, investors, accountants and lawyers will want proof that you’re serious about your business. A written plan will provide that proof.
  • To guide you as your business grows
    A good business plan will keep you on track and focused, even as day-to-day work becomes a distraction.

If you’ve never written a business plan before, it can be a daunting prospect. But these 10 steps will help you create the perfect business plan.

1. The executive summary

This is where you describe your company and the product or service that it will sell. This must be brief, to catch and hold people’s attention.

Try to describe the goal and mission of your business in just a couple of sentences. Work hard at this and try to make it memorable.

Treat this section as an ‘elevator pitch’ document – it should be short, concise and easy to remember.

2. Who are your customers?

Do you have a clear idea of the type of people (or businesses) who will buy your product or service? If not, think carefully until you do.  Understand who is your target audience.

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This is one of the first questions any investor will ask you about your business plan. Have your answers ready:

  • Know whether your customers will be consumers or businesses. If they are businesses, who will you target within those companies? Maybe it’s the salesperson, or perhaps it’s the CEO?
  • Determine whether you’ll have regular clients or one-off buyers.
  • Make sure you’ve actually spoken to some of your potential customers.

3. Evaluate the target audience

There’s no room for guessing here. You need to identify the people who will buy from you. Think about the following:

  • Demographics – such as age, gender and social status.
  • Firmographics – this applies when selling to businesses. Firmographics includes size of the company, revenue of the company and services or products of the company.
  • Location – perhaps a specific area, town, or even country.
  • Profession – maybe you’re targeting accountants, police or lawyers, for example.
  • Groups – such as people with shared interests or habits.

The better you evaluate your target audience, the more comprehensive your business plan will be.

4. What are your opportunities?

Successful businesses think big. You might be starting small, but you don’t have to stay that way. So write down the possible opportunities for your business as it grows.  Check out our article turning your hobby into a business.

For example, perhaps you’re planning to start by selling over the internet. That’s great, but how will you get traffic to your site? How will people find you online? Will you need salespeople? If not, how will you convince people to buy from you?

As the business grows, is there scope for a bricks-and-mortar retail outlet? What other opportunities will you have if your business grows as planned?

Understand the competition

Every business has competition. If you don’t mention yours, investors will think you’re unprofessional – or just plain naive. You must understand your competitors. Be thorough, and list all your existing and potential competitors:

  • Who are your direct competitors – those selling the same products or offering the similiar services as you?
  • Who are your indirect competitors – those whose market overlaps yours?
  • What will prevent other companies competing with you – what are the barriers to entry?
  • What is your USP (unique selling proposition)? In other words, what’s your point of difference that makes you different from your competitors?

That last point is important. You need to explain how your business will differentiate itself from all the others. That might be based on price, service, quality, range or value. Make sure you spell it out.

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6. Build a simple financial plan

All business plans should contain some financial information. This should include the overall costs of setting up your business. For example:

  • Cost to make or buy products.
  • Costs for labor and manufacture, including raw materials.
  • Staff costs, especially for service businesses.
  • Distribution and marketing costs.
  • Fixed and variable overheads.

Good accounting software will help you create a draft financial model. We’ll look into this in more detail in a future guide. For now, talk to your accountant or bookkeeper for help and advice.

7. Include an outline marketing plan

Every business must do some level of marketing.  For this section of your business plan, you need to think about the five ‘Ps’:

  • Pricing – how will you price the end product?
  • Positioning – how does your product or service fit into the market?
  • Promotion – what channels will you use to attract and communicate with customers?
  • Profit – how much do you expect to make per item sold?
  • Place – what are your sales channels?

8. Plan your operations

Put your vision to one side for a moment. What are the daily tasks that need to be done when running the business? Include all business processes such as manufacture and packaging. Try to cover all departments too, including sales and customer service.

9. Get the right people

This is one of the most important factors. Think about who you want to hire. How will you find people whose skills complement yours? And how will you convince them to work for you?

Also think about who you want as your business advisors. You’ll need people you can trust, to guide and mentor you at times when you need it.

10. Simplicity is the key

Keep it simple. Complex and long documents won’t be read – either by you or by potential investors. A business plan should be brief, relevant and focused.

If you find yourself getting carried away while writing, stop and take a break. Then go back and edit what you’ve written. Shorter is better. The core of a good business plan should be just a few pages long.

Plan your business around your strengths

As you write your business plan, keep in mind your strengths – and also any areas for improvement. This will help you construct a plan that makes the most of your abilities, while still being realistic. That’s more likely to convince investors that you’re serious.

Your business plan is a roadmap for your business – but it’s not set in stone. Review it at least once a year and make changes if necessary.

Above all, keep getting feedback from your advisors – official and unofficial ones. With their help, you’ll create the perfect business plan that takes you where you want to go.

Market Research for LGBT Business Startups

Ever thought that market research is just for big businesses? Well, small businesses can benefit from it too. We spoke to Keen as Mustard Marketing to find out how you can learn more about your target markets.

How market research can help small businesses

Knowledge is power. And whether you’re selling coffee, computers or conferences, it pays to know and understand your target market.

Big businesses do this using market research that’s usually quite costly. They have teams dedicated to interviewing customers, carrying out surveys, arranging focus groups and analyzing buying patterns.

While much of that work does require a big budget, it’s still possible for small businesses to carry out lean and effective market research – and there are good reasons for doing so.

When should you use market research?

OutBuro - Market Research - LGBT Entrepreneurs Startup Business GBLT Professionals Lesbian Owned Company Gay Transgender Bisexual Community Job Postings News Information JourneyThere are certain times in a company’s life-cycle when market research can be particularly useful. For example:

  • To see whether a new business idea is viable
    You have an idea for a new business. Is there a market for it? Don’t just guess – use market research to find out.
  • When moving into new markets
    This is especially true when selling abroad. Different countries and cultures have different markets. What works in one might not work in another. Research will help you uncover the differences and adapt to them.
  • Before launching a new product or service
    You might think you have the perfect new product or service – your customers may think otherwise. It pays to get feedback before you launch, so you can make any necessary changes quickly.
  • When applying for funding
    Show potential investors that there’s a gap in the market – and that your company is the one to fill it.

Stay focused

If you’re planning to carry out market research, keep it tightly controlled. Concentrate on the key questions that matter to your business, then work out what information you need in order to answer those questions.

With that knowledge you can decide how best to obtain the answers – with a focus group, online research or survey.

Don’t be tempted to ask all sorts of additional questions. Stay on topic and you’ll get useful answers that will help you shape your business strategy.

Effective market research for small business – five top tips

If you want to make the best use of market research, here are five key points to bear in mind:

  1. Start researching early
    Whether you’re selling locally, nationally or globally, it pays to know the potential size of your slice of the pie. Do your research before you start trying to sell in a new market.
  2. Don’t waste money
    Small businesses can’t afford to splash out on expensive research – and luckily they don’t have to. Small focus groups and surveys of your existing customers can be effective and inexpensive.
  3. Use existing research
    Someone may have done the hard work for you already. Check out online reports, field reviews and magazine articles.
  4. Find out what your customers are saying
    The internet makes it easy to find out what your potential customers think. Read consumers’ blogs, watch their YouTube videos and vlogs (video blogs), and check out discussion forums and social media.
  5. Use the cloud and big data
    Companies such as Google spend vast amounts of money collecting research. Take a look at Google Trends and Google consumer surveys. Google Trends will let you see what people are searching for. For example, if there’s a large volume of people searching for glow-in-the-dark cat collars and no one is selling them, then there may be gap in the market. Google’s findings are often free so make use of them.

Know the limits of market research

Market research will give you some information about your target market, but it can’t predict the future of your business with perfect accuracy. That’s because:

  • a small sample of your potential customers might not be representative of the whole market.
  • people don’t always say what they truly believe in surveys.
  • the research might not take new trends into account.
  • the way your business acts in the market will change the outcome.

That doesn’t mean market research for small business isn’t useful – far from it. But you should take the findings with a grain of salt and consider other factors too.

In particular, trust your gut instincts, because they are often based on the experience you’ve gained working in the field.

Market research is a useful tool

Doing some low-cost market research can really help you learn more about the market demand for your products or services. And while it’s not always a sure-fire way to predict whether your business will succeed, it’s a great way to get new insights and opportunities.

When you have a combined strategy that includes your own intuition and customer feedback, market research can help your business perform better and enter new markets successfully.

LGBT Entrepreneurs – Managing Your Business Finances and Cashflow

Your small business exists to make you money. But whether you sell goods or services, you need to make a profit. And you can’t do that unless you manage your finances and cashflow carefully. So what are the best ways to do it?

Cashflow problems and mismanaged finances are major causes of business failure in the early years.

Money management matters

The first few years for any new business are crucial to its long-term success, with many challenges to overcome and lessons to be learned.

Cash flow problems and mismanaged finances are major causes of business failure in the early years. Some companies fail to plan properly, some set their sights too high or low, some don’t keep track of costs, some fail to chase payment.

You can maximize your chances of business success by being aware of the pitfalls. Then you can manage your company’s finances carefully and keep a close eye on its cash flow.

Taking sensible, practical steps will help you control spending and grow your business without taking excessive financial risks. Here are some useful tips to consider.

Use financial planning and forecasting

It’s useful to develop a financial plan or framework to keep track of finances coming into and out of your company. For example, one model for your business might be to spend:

  • 50 percent of revenue on expenses (such as payroll or supplies).
  • 30 percent of revenue on building the business (such as expansion of equipment or recruiting costs).
  • 20 percent of revenue on the future, for developing new products and services.

Different plans work for different businesses, and you should discuss this with your accountant to see what works best for you.

But circumstances change. When they do, your financial plan should change too. Try to conduct some simple forecasting of your business for at least the next six months. Be realistic and try to estimate how much you will sell and how much you will spend. Plug these numbers into your financial plan and see if the results will still work for your business. If not, you may need to change your plan.

Be ambitious but stay realistic

Ambition and enthusiasm are important characteristics of business owners and managers. But so is the ability to make rational financial decisions based on the facts. When you start a new business the feeling of control can be exhilarating. Free from the constraints of employment, you can make any financial decision you want to. Some of those decisions will be good. Others won’t.

Like any other area of life, learning to run a business comes through experimentation, successes and occasional mistakes. The mistakes are important – if you read any successful entrepreneur’s autobiography or biography, mistakes will feature highly.

But successful entrepreneurs have two things in common – they learn from their mistakes, and they make small enough mistakes that they are able to recover from them financially.

This is a pragmatic approach to doing business. Few large companies became large overnight. They grew over a period of time, with setbacks along the way. Taking the occasional risk is part of good business. Taking unnecessarily big risks is not.

Chart your cash flow

Good accounting software can create charts of inflows (sales of goods or services) and outflows (accounts payable) for your business. It will let you change the time period and other variables so you can really understand what’s happening. If you look at these charts over a period of weeks and months, you’ll get an idea of the rates of flow of money into and out of your business.

Obviously you need the inflows to be greater than the outflows to make a profit. But the size of the difference is what’s important. It will vary over time because few businesses make a consistent profit day in, day out. Some months or weeks will be good, some not so good. Looking at the charts will help you see the pattern as these values change.

Is the difference between income and expenditure often small? Does it sometimes dip into negative territory? Those are periods when your business is potentially at risk of cash flow problems. Try to find out what’s causing this to happen at specific times. You can then attempt to restructure some aspects of your business to avoid the dips.

Make minor adjustments to regulate cash flow

Where possible you should have enough cash on hand to last you approximately three to six months. That way, if you have a rough month or two it shouldn’t have a major effect on your business. But if your cash flow is causing problems at specific times of the month or year, don’t panic. You may be able to improve the situation without dramatic changes. For example:

  • Consider negotiating different payment dates to your suppliers to better align inflows with outflows
  • Experiment with reducing your invoicing payment terms by a day or two to encourage your customers to pay faster
  • Understand the negative impact of having inventory sitting in your back office or warehouse – it costs you space and revenue
  • Establish a good line of business credit so you can access extra short-term money if necessary.

Manage your company’s debt

Debt is a fact of life for many businesses. It might be start-up funding, loans for capital equipment or commercial mortgage payments. Few businesses are entirely debt-free. And if the cost of the money you borrow is lower than the return generated by your company’s use of that money, it makes sense to borrow.

It also makes sense to keep an eye on your borrowing costs. This is particularly true with variable rate loans, which can change due to any number of reasons, some of which might only be in the small print of the loan contract.

Assess your debts on a regular basis. Look at repayment costs, see whether your circumstances have changed, and decide whether you need to reduce – or increase – your debt funding. And don’t forget to shop around. Get your accountant to see if there are better ways for you to borrow. Shifting your debts to a different lender can sometimes save you a lot of money.

Review expenses regularly

It’s important to keep a close eye on your business expenditure. Good accounting software will let you quickly draw up useful reports, such as:

  • Profit and loss reports
    These show your company’s income, expenses and profits over time.
  • Balance sheet reports
    These show assets, liabilities and net equities.
  • Statement of cash flows reports
    These show the cash flowing in and out of a business.
  • Accounts payable and accounts receivable reports
    These show how much money is owed by, and to, your company.
  • Depreciation reports
    These give you a breakdown of the value of the assets owned by your company.

Keep an eye on your payroll too, even if you outsource some of it. For a growing company, this is often more complex than anticipated

Review all of these regularly, preferably with the help of your accountant or financial advisor, who can act as a sounding board.

Remember to keep your personal and professional finances separate: use a separate credit card and bank account for business-related expenses. That makes it much easier to keep track of your company’s costs and also identify business tax write-offs.

Five questions to ask before bidding for big contracts

Don’t run before you can walk. If your business is ticking over nicely and you’re given the opportunity to bid for a big new contract, stop and think first. It can be tempting to “punch above your weight” and go for the prestige associated with a big contract. But that might not be the right choice for you.

Ask yourself some questions before you bid.

  1. Do I have the staff to fulfill the contract if I win it? If not, will I have to hire new staff or use contractors?
  2. Do I have the funds to pay for any new equipment required?
  3. What effect will the new contract have on my current business: am I likely to neglect my existing clients?
  4. What happens when the contract ends, or if it’s terminated early?
  5. What happens if the new client takes a long time to pay?

Sometimes it’s preferable to build up a number of smaller clients instead of trying to sign up one or two larger ones. Your cash flow is likely to be more predictable that way. And if one contract ends suddenly, or you experience payment problems, it’s less likely to ruin your business.

Understand the true cost of money

The money you receive obviously has value to your business, but so does the money you spend. Getting value for money is important in both directions:

  • Pay all your bills on time to avoid being charged interest and negatively impacting your credit score/rating.
  • Look into the pros and cons of accepting different payment options such as cash, credit cards, PayPal and other options. Charges for receiving payments will eat into your profit margin, but convenience helps your customers to pay you.
  • Research the costs associated with buying or leasing equipment. There could be hidden fees for maintenance or damage, not to mention different effects on your tax bill.
  • Save money by educating yourself about tax legislation, insurance requirements and retirement fund financing.
  • Consider bartering (trading goods and services) if it will reduce payment costs. But be aware that many countries treat this as a taxable transaction.

Good accounting software will break down your accounts in fine detail, so you can see the monetary cost of payments into and out of your business.

Adjust your margins and get your pricing right

What are the margins for the products or services you sell? This can be hard to quantify if you’re in the service sector, unless you use sub-contractors to carry out the actual work for you. But it’s easier for retailers. Some might simply apply a 50 percent mark-up to their cost prices, and sell an item for $30 that cost them $20 to buy.

Such basic pricing techniques are attractive for their simplicity, but there are often better alternatives. If you learn about price elasticity, or the price sensitivity of the things you sell, you can price your products or services more accurately.

For example, let’s say you price an item at $50 and sell 80 of them in a week. If they cost you $20 each to buy, the $4,000 of revenue looks pretty good. But if you priced them at $30, would you sell 300 of them? Or if you priced them at $60, would you sell 70 of them?

There’s no easy answer. It will depend on the desirability of the product, the location and visibility of your company, the effectiveness of your marketing and the pricing policies of your competitors.

What you can do is experiment. Test different pricing for a week or two, and keep track of how much inventory you manage to sell at each price point. Use good accounting software to compare the revenue and profit from differently-priced products over time. Remember to take into account any seasonal variation, cost overheads and other factors. With some fine-tuning you should be able to get the maximum possible profit from the items you sell.

Chase the money you’re owed

Understand the importance of collecting money on time so that you don’t leave cash on the table. Use your accounting software to draw up aging summaries so you can see who is taking longest to pay. And then chase them, politely, and keep chasing them until they pay. Make your invoice payment terms and the payment due date very clear, to avoid any confusion.

If you have a lot of invoices to chase, you might consider using a factoring agency. They can guarantee your invoice payments within a certain number of days by buying your accounts receivable ledger at a discount. However, it could cost you a significant percentage of the invoice total, and some agencies exclude the chasing of bad debts. Still, in some circumstances such agencies could help stabilize your cash flow.

Put financial management at the heart of your business

Managing your finances and cash flow shouldn’t be an afterthought. It should be a fundamental part of your business strategy.

To be a successful entrepreneur you must thoroughly understand the numbers that drive your business. That will give you the knowledge you need to keep your company running, and help it to grow when the time is right.

Good accounting software will make it easy for you to plan, forecast, chart and chase your company’s money. But even with that support, only you can steer your business in the right direction.