Ten Ways to Strengthen Your Business Plan

The most important reason to write a business plan is create a roadmap for the entrepreneur or business owner. A plan can also be a valuable tool for communicating your business idea to others, for example, to secure financing or attract investors.

Whatever your reasons, any business plan will be stronger by following these basic guidelines.

1. Anticipate the questions readers will have and answer them in your business plan. They'll want to know about you, your business, and your industry. They'll be interested in your financial and employment history. They'll need to know that you understand your customer, and that you know how to makes sales and serve customers.

2. Forecast sales a bit lower than you think they will be. Smart business planners will intentionally err on the conservative side, showing viability with as few sales as possible.

3. Estimate expenses a little higher than you believe they might be. The brutal truth is that contingencies or expense buffers are all too often necessary and get spent once the business is in play.

4. Remove some of the guesswork from your sales projections by gathering items such as signed contracts, letters of intent or some other form of written confirmation that customers are willing to buy your products or services.

5. Provide a complete set of clear and realistic financial forecasts, and make sure you know them well enough to discuss them intelligently with your banker or investor. Demonstrate your understanding of how money flows in and out of your business, and convey your knowledge with sales projections, a cash flow forecast, and pro forma income statements and balance sheets.

6. Be frugal. In your business plan, show readers that you make wise buying decisions and that you are sourcing the best products and materials. If you can get by with an older truck, don't ask for financing for that shiny new one.

7. Be realistic and factual throughout your business plan. Nothing undermines your credibility quicker than inaccuracies. Where it makes sense to do so, state where the information comes from.

8. Communicate various ways that you know your business, including, understanding your customers, having a savvy approach to pricing, and knowing how to make the operation work efficiently.

9. Your business plan needs to communicate your knowledge of the industry you will operate in. What types of goods are sold? Who are your competitors? What competitive advantage will motivate customers to buy from you?

10. Somewhere in your plan you'll want to talk about your qualifications, and share information about any business-relevant assets such as your educational background or work experience.

Everything you do to create a business plan will increase or decrease your confidence in the business idea. As your confidence increases you move toward launching the business; if it decreases, you have more work to do.

Type of Business Could Surpass Your Current Income

I know all too well what it feels like to be underpaid and unappreciated. Many people feel this way every single day and maybe you do as well. You probably work 40 hours or more per week and your paycheck doesn't seem worth the effort. Being underpaid leads to a lack of job satisfaction and frustration. It makes you want to search for something better and quit your current job.

The problem for many people is that they get so desperate they end up finding another job that is no better than the one that they left. You may possibly earn a little more but you're still trading hours for dollars and may soon fall back into the same rut. If you have ever read the book Rich Dad Poor Dad then you know the author's stance on being an employee. In order to have more income beyond just getting by as well as time-freedom to do what you want is by being a business owner but not with just any type of business.

Now you may be thinking, "I can't run a business, I have no experience." However, there is one business that doesn't require you to have experience or a college degree. It doesn't require tons of money to start and you don't have to spend 40 hours a week running it. This business is called network marketing (also referred to as direct selling.) Network marketing levels the playing field for everyone. People from all walks of life have created residual income and time-freedom for themselves.

I know of actors, singers, teachers, doctors, and various other professionals who have become a part of a network marketing company because they enjoy helping people as a way to earn more income. The two best things about this industry is that you create residual income and time-freedom. Being an employee cannot offer that and neither can a traditional small business. You spend a bulk of your time doing both.

If you dedicate your time and effort into building your network marketing business, you have the ability to enjoy the income you make. You will not lose income if you decide to go on vacation or have to take a few sick days, etc. Keep in mind that there are tons of opportunities out there so it is important to find one that offers products and/or services that you enjoy using yourself.

Selling a Small Business As a Short Sale

Drowning in business debt!?! Even when a company's sales start increasing, debt can eat away at the profits...

More and more small business owners are finding that profits are going to servicing their debt and keeping their business operational. In such cases, an option is to sell the business through a short sale. Especially if a business owner is burnt-out, looking at shuttering the business and declaring bankruptcy.

Declaring bankruptcy is different as a small business owner. It's not just an anonymous bank or bureaucratic phone company that is owed money; it's often suppliers and vendors with whom there are long-term personal relationships. And often, friends and family have invested in the business or lent large sums of money to help keep the business afloat.

A short sale can provide creditors at least a portion of the funds owed to them, while alleviating the small business owner of having a bankruptcy tied to their name and credit. It can also save the jobs of the employees.

Special note for franchise owners - If the business is under a franchise agreement and the franchise payments are grossly in arrears, there is a chance the franchisor can take back the business, leaving the owner without a business and still holding all the debt. It is in the interest of the franchisor for the business to sell and bring in a new owner who will start paying royalties.

How it works -

An experienced and competent business broker will package the business based upon its net profit and assets. The debt and other non-operational expenses will be added back to the net profit and an industry appropriate multiple will be determined. If the business sells for less than what is owed, it is a Short Sale. If it sells for more than what is owed, the owner will receive whatever is left over after all the debt is paid.

In a normal sale, an escrow is used primarily to protect the buyer from successor liability - any debt attached to the business. In a short sale, the escrow process also aids the seller in settling the business's debt.

Once all the debt is established, the escrow officer will prepare a seller's estimated statement reflecting all secured and unsecured debt. Secured debt includes tax liabilities, private liens, judgments, etc. Unsecured debt includes private loans. If the sale price covers all the secured debt, the remaining funds are distributed pro rata to the unsecured creditors. If the sale price doesn't cover all the secured debt, remaining funds are distributed pro rata to the secured creditors.

All creditors will need to agree on the payout in order to close the deal. Since the alternative is usually bankruptcy for a small business owner, creditors would prefer to receive something rather than nothing. Thus, they generally will agree to the pro rata payout.

Although short sales are messier than regular business transfers, they are a win-win for the buyer, the seller and the creditors. The buyer gets a good deal on the business; the seller avoids bankruptcy and is alleviated of their debt while their creditors get something rather than nothing.