The Business of Doing Business: A Handbook for Success in Business - Softcover

Lane, Ken

Softcover

ISBN 10: 1438936613 ISBN 13: 9781438936611

Publisher: AuthorHouse, 2009

About this title

Excerpt. © Reprinted by permission. All rights reserved.

THE BUSINESS OF DOING BUSINESS

A Handbook For Success In BusinessBy Ken Lane

AuthorHouse

Copyright © 2008 Ken Lane
All right reserved.
ISBN: 978-1-4389-3661-1

Contents

Outline For A Business Plan.................................................................................................Page-1Marketing & Your Business Plan..............................................................................................Page-9Market Planning For Small Businesses........................................................................................Page-11Service Business Marketing..................................................................................................Page-15Placing A Value On A Business You Are Considering Buying....................................................................Page-21About Incorporating.........................................................................................................Page-25Developing A Mission Statement..............................................................................................Page-33An Outline For Promotion....................................................................................................Page-37Pricing Guidelines For Launching A New Product or Service...................................................................Page-39Patents, Copyrights, Trademarks, Service Marks, & Trade Secrets.............................................................Page-43Employee Confidentiality Agreement..........................................................................................Page-47Non-Disclosure Agreement....................................................................................................Page-53Time Management.............................................................................................................Page-57How to Develop & Keep a Solid Team of Employees.............................................................................Page-61Creating Enthusiasm in Your Workforce.......................................................................................Page-63Employment Rights, Wrongful Discharge, and Sexual Harassment................................................................Page-69Positioning Products & Services.............................................................................................Page-71Recommendations About Advertising...........................................................................................Page-77How to Write Potent Copy For Print, Television, & Radio.....................................................................Page-81More About Advertising Including: Average Advertising Investments and Annual Marketing Budget Worksheet.....................Page-91Advertising Media Compared Including a Media Planning Guide.................................................................Page-97Understanding PR & The Media................................................................................................Page-103Leveraging The Internet To Help Grow Your Business..........................................................................Page-109General Internet Demographics: Are These Your Customers?....................................................................Page-115Should You Outsource Your Web Site or Do It In-House?.......................................................................Page-117How To Attract Visitors To Your Web Site....................................................................................Page-121Publicizing Your Web Site...................................................................................................Page-125Glossary of Web Terms.......................................................................................................Page-127

Chapter One

Outline for a Business Plan

Set goals for yourself and your company. It will force you to crystallize your thinking, taking into consideration everything that affects your business. You will have to analyze, assimilate, calculate, revise, and make decisions about the products and/or services your company provides, and how to make a profit through a marketing campaign. This is called a STRATEGY. There are three questions you should be able to answer.

1. What business are you really in?

2. What is happening in the business environment that could affect your business?

3. How do you organize all the resources you have (human, financial, material, etc.) to meet the business challenges ahead?

4. The plan should be typewritten including page numbers, an index for easy reference, a glossary if you are using words and terms that are foreign to potential investors, and a cover page outlining your intents.

5. The document should be inserted into a binding or cover.

6. Your plan should be approximately 25 to 50 pages long. The length depends on many factors, including type of business, supporting documentation, etc. Again, there is no set rule on the length of a business plan; 25 to 50 pages are simply used as an average.

Summary of the Proposed Venture

This should include the company's goals and purpose, the product features and market potential, capital requested, and technical and operational milestones.

Table of Contents

List the different sections of the plan. Organization of the plan will show something about your ability to organize a company. Management abilities are one of, and probably the most important, "keys" to funding by outside sources. "Anyone can come up with an idea, but we can take the idea and build a company around it."

Statement of Purpose

Outline the company overview, goals and objectives, company strategies, and critical success factors.

Operations Plan

Should include the background summaries of the principals, employee staffing requirements, a company organization chart, a product and service description, the purchasing and production planning overview, and critical success factors.

Marketing Plan

Should include a product and service description (in more detail than outlined in the Operations Plan), a market description, promotional strategy, pricing strategy, distribution channels, business location, analysis of competition and critical success factors.

Financial Plan

It will include the balance sheet, income statement, cash flow statement, sales statistics, staff additions, payroll expenses, capital additions, depreciation expense, debt amortization, accounts receivable, accounts payable, material flow, and detailed expenses. All projections should be based on a five-year time period. The more comprehensive your plan is, the better your chances are of successfully obtaining the financing.

1. The Business Plan Objectives and Goals

A. Description of the business.

1. Type of business.

2. Status of business.

3. Business Form.

4. Why is your business going to be profitable?

5. Have you spoken with other people in this kind of business?

6. What were their responses?

7. What is special about your business?

8. How will you run the business?

9. When will (did) your business open?

10. What hours of the day and days of the week will you be in operation?

11. If business is seasonal, will the hours be adjusted seasonally?

2. The Marketing Plan

A. Basic Marketing Considerations.

1. Who is your market?

2. What is the present size of the market?

3. What percent of the market will you have?

4. What is the market's growth potential?

5. As the market grows, does your share increase or decrease?

6. How are you going to satisfy your market?

7. How are you going to price your service, product or merchandise to make a fair profit and, at the same time, be competitive?

B. When you have a feel for your market, the following questions can be raised:

1. How will you attract and keep this market?

a. the image of the business

b. pricing

c. customer service policies

d. advertising

2. How can you expand your market?

C. Pricing considerations.

1. What price do you anticipate getting for your product?

2. In setting the price for your business, you must

3. consider:

a. cost of merchandise

b. labor and operating costs

c. planned profit

4. Is the price competitive?

5. Why will someone pay your price?

6. How did you arrive at the price? Is it profitable?

7. What special advantages do you offer that may justify a higher price (You do not necessarily have to engage in direct price competition.)?

3. The Location

A. Building, transportation, parking, and renovation considerations:

1. What is your address?

2. What are the physical features of your building?

3. Is your building leased or owned? State the terms.

4. If renovations are needed, what are they? What is the expected cost? Get quotes in WRITING from more than one contractor. Include quotes as supporting documents.

5. What is the neighborhood like? Does the zoning permit your kind of business?

6. What kind of businesses are in the area?

7. Have you considered other areas? Why is this one the desirable site for your business?

8. Why is this the right building and location for your business?

9. How does this location affect your operating costs?

10. Will the customer come to your place of business?

11. How much space do you need?

12. Will you want to expand later on?

13. Do you need any special features required for lighting, heating, ventilation?

14. Is parking available?

15. Is public transportation available?

16. Is the location conducive to drop-in customers?

17. Will you pick up and deliver?

18. Will travel time be excessive?

19. Will you pro-rate travel time to service calls?

20. Would a location close to an expressway or main artery cut down on travel time?

21. If you choose a remote location, will you have to pay as much as you save in rent for advertising to make your service known?

22. If you choose a remote location, will savings in rent offset the inconvenience?

23. If you choose a remote location, will the customer be able to readily locate your business?

24. Will the supply of labor be adequate and the necessary skills available?

25. What are the zoning regulations of the area?

26. Will there be adequate fire and police protection?

27. Will crime insurance be needed and be available at a reasonable rate?

5. The Competition

A. What is the competition in the area in which you have chosen to locate your business?

1. The number of firms that handle your service?

2. Does the area appear to be saturated?

3. How many of these firms look prosperous?

4. Do they have any apparent advantages over you?

5. How many look as though they're barely getting by?

6. How many similar services went out of business in this area last year?

7. Can you find out why they failed?

8. How many new services opened up in the last year?

9. How much do your competitors charge for your service?

10. Which firm or firms in the area will be your biggest competition? List the reasons for your opinion.

B. Who are your five nearest competitors?

1. How will your operation be better than theirs?

2. How is their business? Steady? Increasing?

3. Decreasing? Why?

4. How are their operations similar and dissimilar to yours?

5. What are their strengths and/or weaknesses?

6. What have your learned from watching their operations?

6. The Management

A. This segment should include responses to the following questions:

1. What is your business background?

2. What management experience have you had?

3. What education have you had (including both formal and informal learning experiences) that has bearing on your managerial abilities?

4. Personal Data: age; where you live and have lived; special abilities and interests; reasons for going into business.

5. Are you physically up to the job? Stamina counts.

6. Why are you going to be successful at this venture?

B. Related Work Experience

1. Direct operational experience in this type of business.

2. Managerial experience in this type of business.

3. Managerial experience acquired elsewhere - whether in totally different kinds of businesses, or as an offshoot of club or team membership, civic activities, church work, or some other source.

C. Duties and Responsibilities

1. Who will do what? Write major job descriptions.

2. What will be your form of legal organization?

3. What are your accounting needs? What records will you keep?

4. What are your insurance needs and what are the costs?

5. Who reports to whom? 6. Who makes the final decisions?

a. Time for planning and reviewing plans.

b. Major operating duties (purchasing, sales, personnel, promotion, production, and so forth as appropriate for your business)

c. PLANNING.

D. Identify your major strengths and weaknesses.

E. Salaries (simple statement of what the management will be paid).

F. Resources available to the business

1. Accountant

2. Lawyer

3. Insurance broker

4. Banker

5. List others, if applicable.

7. Personnel

A. What are your personnel needs now? In the near future? In five years?

B. What skills must they have?

C. Are the people you need available?

D. Full or part-time?

E. Salaries or hourly wages?

F. Fringe benefits?

G. Overtime?

H. Will you have to train people? If so, at what cost to the business (time of more experienced workers and money)

8. Application and Expected Effect of a Loan

A. How is the loan or investment to be spent?

B. What is (are) the item(s) to be bought?

C. Who is the supplier?

D. What is the price?

E. What is the specific model name and/or number of your purchase?

F. How much did you (will you) pay in sales tax, installation charges and/or freight charges?

G. How will the loan make your business more profitable?

9. Financial Data

A. Project a statement of income and expense.

B. Determine the financial requirements to get the business started.

1. List all permanent assets required and the value or cost to obtain each.

a. inventory

b. equipment

c. leasehold improvements

d. automotive or trucks

e. fixtures

f. buildings

g. prepaid

h. etc.

2. Determine the working capital needs (cash), to get the business self-supporting.

a. estimate one-time start-up expenses (non-asset).

b. estimate monthly revenues and disbursements (cash flow) until the time that the business is self-supporting

c. estimate contingency fund-safety factors.

d. total cash needs will equal the highest cumulative negative cash balance in b., plus a. and c. above. Or: start-up expenses + largest cumulative cash operating deficit + contingency fund = cash needs

C. List the money and/or value of assets you intend to invest in the business (owner's equity).

D. Project your financing needs: Value of permanent assets + Working capital = Total funds needed - Your investment = Total financing required.

Marketing & Your Business Plan

Marketing plays a vital role in successful business ventures. How well you market your business, along with a few other considerations, will ultimately determine your degree of success or failure.

The key element of a successful marketing plan is to know your prospects-their likes, dislikes, and expectations. By identifying these factors, you can develop a marketing strategy that will allow you to arouse and fulfill their needs. Identify the demographics of your customers by their age, sex, income, educational level, and place of residence. Initially, target only those prospects who are more likely to purchase your product or service. However, as your customer base expands, you may need to consider modifying the marketing plan to include secondary markets as well.

Develop a marketing plan for your business by answering these questions. Your marketing plan is almost always included in your business plan and should contain answers to the questions outlined below:

1. Who are your customers? Define your primary and secondary target markets.

2. Are your markets growing, steady, or declining?

3. Is your market share growing, steady, or declining?

4. If you are a franchise, how is your market segmented?

5. Are your markets large enough to expand?

6. How will you attract, hold, and increase your market share?

7. How will the Internet attract, hold, increase your target markets?

The Business Plan

Competition is a way of life. We compete for jobs, promotions, scholarships to institutions of higher learning, in sports-and in almost every aspect of our lives. Nations compete for the consumer in the global marketplace as do individual business owners. Advances in technology can send the profit margins of a successful business into a tailspin causing them to plummet overnight or within a few hours. When you consider these and other factors, you can only conclude that business is a highly competitive, volatile arena. Because of this volatility and competitiveness, it is important to know your competitors. Answers to the following questions can help you be more competitive in today's marketplace:

1. Who are your five nearest direct competitors?

2. Who are your indirect competitors?

3. How are their businesses: steady? increasing? decreasing?

4. What have you learned from their operations? from their advertising?

5. What are their strengths and weaknesses?

6. How does their product or service differ from yours?

You should maintain a file on each of your competitors. Save copies of their advertising, promotional materials, and their pricing strategy. Update and review these files systematically, with the objective of determining when and how often they advertise, sponsor promotions or events and offer sales. Analyze the copy they use in their advertising, promotional materials, and sales strategy. For example: is their copy short, descriptive, catchy, and how much and how often do they reduce prices for sales? Using these procedures can help you to understand your competitors better and how they operate their businesses.

Marketing Planning for Small Businesses

A growing number of small business owners and professional advisers agree that marketing is the key factor determining success or failure in competitive markets. Venture capitalists often insist on having an experienced marketing executive on the management team prior to a commitment to full financing. In recent years, major high-technology organizations have replaced their technically educated founder/CEO's with professional managers who have a background and experience in large consumer marketing organizations.

Why this emphasis and interest in marketing? The answer lies in understanding the concept of marketing: the process which converts the firm's human, material, and financial resources into products or services that fulfill the market's needs as the consumer understands those needs. The degree of fulfillment and the cost-effectiveness of the process will determine a company's long-term profitability.

Marketing includes the sales, advertising, promotion, and publicity activities (the communications program) normally associated with marketing. Marketing is thinking and planning about what ought to be done in the future, which can be just the next three to twelve months in some high-growth markets. Sales are the major force in implementing a company's program. The communications program serves to make the selling effort more efficient and cost-effective.

One of the most critical characteristics of highly competitive markets is the rapid obsolescence of products and services. It is an absolute certainty that the nature of the market in the near future will be significantly different from that of today's market. If a company's sales and its communications program are not based on previous marketing "thinking," then the company will simply be reacting and allowing market-oriented competitors to "call the shots" and effectively control it.

Entrepreneurs have a natural and strong bias toward action. Lack of sales many times is not the result of poor sales techniques but the failure to offer a product or service that meets the market's requirements. Action without effective planning is a sure road to failure.

Sources of Information

Marketing planning need not be time-consuming and expensive. For the most part, marketing planning is a common sense way of understanding customers and potential customers and where the company best fits into the market-place. Small business owners and managers working with their sales organizations and customers should be able to perform most of their own marketing planning. Most of the information needed for a marketing plan is available free of charge from a variety of local sources such as: Libraries, Department of Commerce and Community Affairs, Small Business Administration (SBA), US Department of Commerce, Local Colleges & Universities, and Trade Associations. The use of outside professional experts can be helpful, but they should not be a substitute for management's marketing planning responsibilities. (Continues...)

Excerpted from THE BUSINESS OF DOING BUSINESSby Ken Lane Copyright © 2008 by Ken Lane. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: AuthorHouse
• Publication date: 2009
• Language: English
• ISBN 10: 1438936613
• ISBN 13: 9781438936611
• Binding: Paperback
• Number of pages: 148