Cre8tive Flow

So you have decided to start a business. Entrepreneurs are often action-oriented people. There is a natural tendency to want to start doing things immediately. However it is always wise to think before you act. What are the first things you should think about?

In most countries you will find that there is lots of online help to advise you. For example the US Government has a Small Business Administration group. The first thing they recommend is to write a business plan and that is a very common approach.

The Business Plan

A business plan is a road map of how you intend to operate your business to achieve your business goals. The BBC has a very good short description of a business plan. If done well it can take a considerable amount of effort and time. Most venture capitalists require a start-up company to have a business plan before they will even consider whether or not they might provide investment funds.

That is in line with the Initial Steps as set out by the US Government Small Business Administration
group

it all seems a somewhat leisurely process. You almost need to be independently wealthy or have a rich friend to adopt this approach. Perhaps having an angel investor is the only way. Many entrepreneurs with an urge to get results often ignore this cautious approach. That may mean they forget some important steps and are doomed to failure.

Nevertheless there are examples of growing your business without a business plan that seem to be doing pretty well. The founder of Facebook, Mark Zuckerberg, says that he hopes to have a business plan within the next three years. Fred Wilson, successful venture capitalist and author of the celebrated blog A VC, accepts that view and Twitter, one of his portfolio, is another striking example where a business plan seems to be lacking.

Here we will recommend a middle-ground approach. This involves doing that part of the business plan that brings you the most effect rapidly (using that old Pareto principle). The content of the business plan is extremely useful. The checklist of headings can be a useful reminder of all the topics that must in due course be covered. It also includes those that must be handled immediately. Here is the SBA list of headings.

Eventually all must be considered. A practical procedure is to handle the critical items early and complete the remainder as time permits. So what are the critical items? Most of them are what might be called strategic issues.

Strategic Plan

It is useful to split a business plan into two sections: the strategic plan and the operational or action plan. The strategic plan sets the general direction and the way resources will be used. The action plan then details on a time schedule what is to be done and when results are to be achieved.

At the strategy level, one critical item is the human resources that are available. Have you got the right people with skills and experience to accomplish the tasks that your business idea involves? if not, can you involve others in some relationship to correct this. Without the right people, success will never happen.

The other critical items at the strategic level can be summarized in the acronym, NUB. Nub as a word means the essential core of some topic. Here it applies to the business plan. NUB stands for:

• N - Niche of potential customers
• U - USP, Unique Selling Proposition. This describes what you offer to those potential customers, that is unmatched by the competition, and
• B - Bottom-line. The forecasted 12-month cash flow to confirm that this is a satisfactory and viable scenario.

The N and U together define whether you have a product/service package that is likely to be a basis for a successful business. The B highlights the acceptable cash flow, without which the business will not survive.

The approach we suggest here is to refine this NUB analysis while at the same time taking some essential actions which will help to launch the company. The previous article on The Customer Is The Boss has highlighted the importance of looking at everything from the point of view of the prospect. The U signals the challenge we have. Our product / service must be something the prospect really wants and which they feel is best bought from you. You must do enough research to confirm that you have a winning proposition and that there are sufficient prospects in this niche. If you believe you are ending up with a me-too product, then you should re-examine the niche and the product service package you are proposing. Some adjustment of one or the other may result in a product service package that has no direct competitor.

A minimal requirement is that the business must survive for the first 12 months. In other words you should be forecasting a survivable cash flow. A convenient way of checking this is to develop a 12 month Excel spreadsheet that calculates the bottom line. This should detail the cash inflows from revenues and investments and the cash outflows for expenses so that the net cash flow can be determined. Once an acceptable 12 month cash flow pattern has been developed, then it should be regarded as a commitment to yourself rather than merely a forecast. Only by doing this and working to make it happen can you be assured that the company will survive the first 12 months of life.

Action Plan

At this point, the NUB analysis suggests we have a viable project. What then do we do first? Remember that this is the Internet age. Marketing through the Internet is likely to produce the best return on our investment. The most important item is how our company will be known on the Internet.

The Company Name / Domain Name / Brand

The most important test of a company name is whether a Google search for the name leads to the company. Google is by far the way most visitor traffic comes to most websites. If Google does not equate the company name with the company, this is a major weakness.

Once the right name has been found, it is important to stay with this name and build up its visibility on the Internet. This puts the pressure on getting the right name as quickly as possible and then sticking with it.

The second criterion for a good name is that it should work well for human prospects. Ideally it should be a mental hook that triggers a certain brand image. Someone who has never heard of the company when hearing the name should have an appropriate view of what the company offers.

Getting the right name demands great creativity and an ability to avoid some very obvious mistakes. Here are some good rules in order of declining importance.

• Have a short name that is easily pronounced and easily understood.
• Avoid accents and punctuation marks in the name.
• Secure the dotcom domain if possible.
• Choose a name that describes the product/service package

Government Requirements

It is important to be legal at all times. You should check all Government requirements and licensing arrangements for the type of business you are setting up. Any necessary permits or registrations should be obtained.

Faster Is Better

With the NUB analysis confirming the viability of the project, the right company name chosen and appropriate government licenses and permits in hand, we are ready to roll. What are the important next steps?

Before the Internet, Push Marketing was the approach. When all was ready, you would spend some (often many) promotional dollars and Da - daa!!! The product was launched in the marketplace. You can still do that, but it is even less effective than it used to be.

Marketing Takes Longer

Marketing is all about communicating with prospects and clients and ensuring they are ready and eager to buy. This can be a slow process since many others are competing for attention in the crowded Internet marketplace. The earlier the process is started, the greater the results that will be achieved.

In general having a mindset of Faster Is Better will serve you well. As Heracletus, our favorite ancient Greek, said, You cannot jump in the same river twice. Things are in constant evolution. Here are some of the advantages of acting promptly.

• You can test Beta versions of your product with typical prospects.
• You can Learn and improve your product, its features and how it is best marketed.
• You can be farther ahead of the competition
• You can make money faster

Developing a comprehensive marketing section of the business plan would take us far beyond what can be included in this planning overview. The traditional Marketing 4P’s concept provides a framework for this. The four Ps are: Product, Price, Place, Promotion.

• Product: this has already been covered in the niche USB discussion
• Price: pricing and how this may change during the lifespan of the project has a major impact on sales growth and on bottom-line profitability. Excessive prices may rapidly kill the project.
• Place: this covers the location at which sales are made and sometimes has less relevance online products and services.
• Promotion: this includes not only online tools but the traditional off-line promotional methods (TV ads, billboards, newspaper and magazine ads, etc.)

The list of online promotional methods is long but here are some of the more important ones:

• blogging (this will be covered in the next article)
• Search Engine Optimization (SEO)
• email newsletters
• Ads on relevant websites
• PR - online media releases
• AdWords and other online advertising networks
• social media involvement
• webinars, etc.

An appropriate marketing mix of these various tools must be set out over the 12 month time horizon to produce early results with the available person/dollar budget.

The Business Must Last The Course - The Ability To Survive

Planning is not a once for all activity but is an ongoing part of the road to success. The plan must set out the objectives against which actual performance is measured. Initially the plan may have some summary targets such as total prospects making contact or the number of items sold. In time as more knowledge is obtained, sub-objectives can be targeted as well. Online activities provide a wealth of data on what prospects do when they visit the website, what they look at and whether or not they take action. As time passes, improved knowledge on these matters provides a basis for more detailed plans and targets. In this way remedial actions can be more easily taken early.

Useful References:

• How to write a business plan (BBC)
• Writing The Plan (US Small Business Administration)
• The Marketing Plan
• Faster Is Better
• The NUB Of Getting More Internet Sales