3- BusinesBootCamp

4. Business Environment

5. Description of Product or Service.

6. Marketing Plan
Should be written as separate plan, and excerpts included here.

7. Operation Plan
Should be written separately and excerpts included here.

8. Financial Plan
Should be written separately and excerpts inserted here.

9. Financing Proposal

10. Appendices

There is no one proper way to write a business plan. It is a fluid, a working document that you should not be afraid to go in and "polish up" a bit from time to time - even every day if need be!

Business Plans serve two main purposes : To guide your business in both everyday tasks and in growth; and to present to funding sources for capital.

For more information, buy and read these Biz$hop Special Reports:
Writing a Business Plan R10601 - $5.00
Writing a Marketing Plan R10602 - $5.00
Writing a Financial Plan R10603 - $5.00
Writing an Operations Plan R10604-$5.00

It is not at all unusual to tailor a copy of the business plan for each purpose. For the operational (in-house) plan, you stress cost savings and go into much more detail. In the fund seeking business plan, the soundness of the company and the potential return on investment are stressed, while many of the operation details are glossed over.

If you are seeking outside financing, prepare a funding proposal (1-3 pages) that can accompany the business plan. The plan should be targeted to a specific lender, and reworked with the names, terms and conditions being sought from each lender.

Remember that a business plan is meant to be a working document, not an archive gathering dust on a shelf. As such, it should be frequently reviewed and altered.

Breaking the Plan into different segments, as recommended here, makes updating much easier. Your Marketing Plan may change for instance, without any other part of the Business Plan changing. By separate plans, you avoid having to repaginate and reindex the whole Business Plan.

Keep a "clean" copy that you can use to present to potential investors, and a "working" copy that you feel free to scribble on, make pen changes to, and use as a daily guide. It is a great use for your computer!

The important caution is that you don't become so trapped into planning, that you don't get started. Too many would-be entrepreneurs spend all their time thinking and dreaming, when they should be doing. Don't worry about perfection - hammer something out and move on! That is why having help is good.

Together, they give you a complete framework to make a near-perfect Business Plan. You'll impress anybody that looks at your Plan, stand a great chance at winning funding, and what's more important it will be a valuable working document that will help your business succeed.

Many sources of help exist. You can order the Special Reports from Biz$hop, which will allow you to do your plan easily. There are several computer based programs for sale that will help you write your plan. The local community college or private seminar company undoubtedly offers courses on how to write a business plan. Your city or area Chamber of Commerce may have scheduled counseling sessions, classes or materials to help. Banks may offer individual or group help. Go to the library or a bookstore, and you'll surely find several books on how to write a business plan. Last but not least, the Small Business Administration puts out a number of publications and a computer program to help you do this. They offer free assistance through area SBDC (Small Business Development Corporation) offices and through the SCORE program (Service Corps of Retired Executives). Check the phone book for the SBA, or contact them through the Chamber of Commerce in your area.

3. Plan Of Action

Whether or not you have a formal business plan, create a timetable plan of action for your business. Give yourself deadlines. If you don't, you are likely to find yourself among the millions of Americans who say they would like to start a business someday. The operative word is "someday."

The habit of writing out POA (Plan of Action) will serve you very well, and will be of benefit not only in managing your own affairs but as a tool you can provide clients, and even instruct them in.

4. Get Legal

The first step to getting your business started has to be to get your business license. This is usually a state or provincial government requirement, but the real reason to get one is Federal.

Once you are officially in business, you can deduct from your taxes any expenses associated with getting your business up and running. These include such things as equipment purchases such as computers, seminars and manuals, professional subscriptions and the like. If you are not yet in business, the same expenses are considered personal expenses, and not deductible. While it is possible to claim the deduction without having obtained your business license, the lack of one could be evidence for the IRS to disallow your deduction, and conversely having one is the simplest evidence should the deductions be questioned.

Note that you do not need to be making sales yet, and in fact you need not make any profits for some time. The IRS has a guideline that you should make a profit three out of five years or risk having the expenses termed hobby expenses instead of business expenses. This is a guideline only. If you could prove that you were seriously trying to run a business, could demonstrate vigorous marketing efforts for instance, but had not yet made a profit, there is little likelihood that you will lose the deduction.

In most states, the state business license is a relatively simple matter. You should also inquire about a resale number. This will allow you to purchase items from wholesalers without having to pay retail sales tax. You collect sales tax later from your customers and then forward that money to the State. Your local city, town or county government may also require a business license in addition to the State license.

One word of caution - I cannot advise anybody to do anything illegal. However, if you are planning on operating a home-based business, be aware that many places have prohibitive ordinances in effect. Inquire anonymously what the restrictions are in your area, and then decide if you want to proceed or not. Many people are operating their business without the local license, just because of the stupid ordinances in effect. Paul and Sarah Edwards, prolific home business writers, estimate that only 1 in 15 home businesses is completely legal.

If your community does have bad restrictions on home based business, I encourage you to join a local association for home based business owners and work to get the rules changed. The zoning laws were an industrial age invention that have not kept up with the rapidly evolving post-industrial economy. The old idea of commercial staying in a commercial area, and residential in a residential, is being shaken by the huge movement towards home based businesses.

There are additional legal ramifications to this business that are addressed in Section 5 - InfoBusiness

5. Business Taxes

As mentioned, one of the main reasons for getting your license is to be able to take business deductions. You will be able to deduct almost all the expenses you incur in order to get your business up and running. These include such things as a computer, software, professional books, professional newsletter and magazine subscriptions, dues to belong to business associations, all your office supplies, etc.

You will also be able to take the home office deduction. This is a new change for many consultants as a result of the tax bill signed in 1997. Many were previously denied this deduction because of a clause called the Soliman Ruling, which said your home office had to be where you made your money. Prior to 1997, the IRS would say consultants actually made their money in the workplaces of their clients, and so disallow that deduction. Now, as long as your home office is an area used regularly and only for business, and you have no other office space, you can take the home office deduction. If your home office is 25% of your total living space, then 25% of your rent or mortgage, 25% of your utilities, etc are deductible from income earned by your business. Of course, as always, check with your accountant.

You will have to check with your state Department of Revenue (or whatever the state taxation authority is) to determine if your consulting service is subject to sales tax. If so, you'll need to charge your clients sales tax on your rates.

Most states don't charge sales tax on services. However, the line can be very thin at times. In most states, if you charge clients for any physical product (for example, you bill them for each copy of a manual you created for them) sales tax must be collected.

6. Client Protection

7. Consulting Advice

One of the surprising things I've found as I have done consulting to entrepreneurs, is how reluctant many are to ask for advice and help. After all, we are in the business of convincing others how important and sensible it is to get outside help. Too many however try to go it alone.

I'm not advocating employees, but rather that you enlist people to help you and help your business. At the very least, a consultant with expertise in areas you aren't expert in can help you build and grow your business.

Besides your business consultant, you should seek out the opinion of a trusted core of people. Just like a large corporate CEO will have a board meeting with his or her department heads, you should have a body of people that you can turn to. I recommend you set up an advisory board for your business.

8. The Advisory Board

The following people are recommended to be on your Board. You can of course make adjustments, adding more strength in areas where you feel particularly weak. If you don't have much experience in or aptitude for sales, then perhaps you'll want to add a professional salesperson to your board.

Business Consultant

Banker

While bankers normally cannot recommend a sole source of assistance and must maintain some degree of impartiality, you can certainly be on the list of two or three that the banker hands out.

Another advantage of having a banker in your corner is of course for financing assistance. Whether or not you will ever need to apply for a loan, your clients may. Having a good working relationship with a banker can be of great benefit, and give you a value to your clients that you otherwise wouldn't enjoy.

Attorney

The second attorney I call my "leg taking" attorney. Others might call this type of person a shark. He or she is the sort of lawyer that if you "sic" them on somebody, they won't let go until all the blood is drained. These folks are relentless, ambitious, and their bark is matched by their bite. You may not want to socialize with them, but if it comes to pressuring somebody to pay up an unpaid bill, or comply with an agreement, they are valuable. I have never had reason to use somebody like this to sue another, but want to know somebody that I can refer clients to when they need this kind of aggressive help.

Accountant

The first accountant type is the Cautious Sam type. They make sure that all your "i's are dotted and t's are crossed." They can advise you on the dangers of any course of action, and are usually very meticulous in their record keeping and organization.
They will also cost you a lot of money, if you rely solely on them. Every year Money Magazine takes a couple's income and has different accounting and tax preparation people figure their taxes. Usually, and in every case in the 1997 April issue, the preparers cost the couple thousands of dollars. Either they were unaware of deductions that the couple were entitled to, or they were afraid to claim them.

So find yourself an "edge-pushing" accountant, especially for your taxes. This person loves finding new deductions that you might qualify for, and new ways to save you more money. They understand that the tax code is a small island, around it is a shallow area of court interpretations, and around that is a deep sea of possible deductions. They say "Let's try this. We probably won't get audited, and if we are, we might be able to win." How do you find these people? Ask others in business. I like to find somebody who is new and wants to make a name for themselves, or is old and hates the government. Ex-IRS agents and examiners are often great edge-pushers.

Entrepreneurs

Where do you find Angels? Just look at local people who have built successful businesses. Ask them to come onboard as an advisor. As they come to believe in you and your business, then you may be able to present a proposal to them that makes business sense for both of you. No funding committees, and they usually don't want to take a majority position in your company, as venture capitalists would. Just a decent return for their money is all that is asked.

Creative

Technical

Small business specialist

Assembling the troops

Meeting payroll

You can also provide the people in your advisory board some no-cost ego strokes. Write each of them a testimonial about how valuable they are to you, on your letterhead. You might include them in a credits section in your brochure or company information sheet - or even on your letterhead!

Taking advice.

Secret Bonus

9. Get Financing

Realistically, you are not likely to get bank financing to start your business - and that is probably good. Try constantly to operate in a non-debt way, and the money you make will go much further. It will also be much less stressful.

I speak from experience in this, and want to advise you also to avoid long-term, non-cancellable leases. I have made a few very bad business decisions, and all of them involved signing leases that locked me into things I wished later to be out of.

Many consultants have a self-financing business, which means really that clients pay you up front or immediately on delivery of your services. I personally work almost exclusively on a payment up front basis - but this is as a result of getting "stiffed" by a client for several thousand dollars. I let the client ride on their bill for a while, and then one day they were gone. Skipped town, house vacated, no forwarding address, etc. I probably could have paid to have them tracked down, and sued for what was owed to me, but odds are they didn't have anything worth suing for at that point. And I am fundamentally opposed to lawsuits anyway.

Whenever possible, get your clients to pay up front. If not possible, be vigilant and prompt in invoicing and be ready to cut your losses if they don't pay on time.

10. Get Protected

Legal Structure

There are advantages and disadvantages to each. For most entrepreneurs, the easiest and usually most recommended form is that of a sole proprietorship.

The sole proprietorship simply means one owner, and is the "default" form. If you do nothing else, you will be set up as a sole proprietorship. The main feature of this form is that it is identified with and intertwined with you. If the business makes a profit, it automatically is income for you. If the business incurs a debt, it is your personal debt as well. If the business gets sued, you will be sued personally as well.

This is both the strength and weakness of the sole proprietorship. You have complete flexibility, and can instantly shift the direction, policies and focus of your company. Yet if there is a problem, the potential for the damage extending throughout your personal life is ever-present.

The partnership is USUALLY not recommended. It is like being married without being in love! You will know all the bad things there is to know about your partner. It can destroy friendships, and you are completely liable for whatever your partner does. If he or she orders a dozen Chinese junks, and then skips town with the money in your account, not only will you be out the money, but you will be liable for paying for the junks when they arrive.

Partnerships can work, when there is a clear division of responsibilities and abilities. If you are a good negotiator, salesperson and "people person", but your paperwork is usually a shambles, and your potential partner is meticulous and detail oriented, but fears selling and meeting strangers, the two of you are a natural match.

One other way a partnerships may be of benefit is if you need more money than you personally have. Your partner's contribution may be what you need to launch your business.

The thing to do if you do contemplate a partnership, is to have a clearly defined partnership agreement drawn up. Have it checked by a lawyer. The agreement should specify what happens if one of you decides to quit. What if either of your dies? Who will do what functions? How will decisions be made. What if you can't agree? Who will pay for what? These things all should be settled beforehand, before they have a chance to cause disruption in the business. Nothing kills a business faster than feuding partners.

The third form of business is the corporation. It is NOT a magic bullet, like some would have you believe. There are two main advantages to incorporation. First, you can have people invest in your company and raise money.Second, because the corporation exists legally as a separate entity, there is a liability shield between you and your assets and the business. If the company gets sued, you may not be. Company debts are separate from your own financial situation.

There are two main types of corporation, the subchapter C and subchapter S. (They refer to subchapters of the tax code).

The C corporation is your "standard" corporation. All the companies listed on the stock exchange are C corporations. You can have unlimited shareholders. If you sell 100,000 shares at $10 each, you've got a million dollars in capital to work with. The investors can be people, mutual funds, companies, foreigners, whatever.

The disadvantage to the C corporation is that of double taxation. If your business earns $100,000, the first thing that happens is that a corporate tax is paid. Then if you want to draw a salary (for in a corporation you are in fact an employee), you must declare that salary and pay personal income tax. The same money gets taxed twice before you get to spend any of it. Recognizing the unfairness of this to the small business, the S corporation was formed.

S Corporation income is simply reported on the personal income tax returns of the shareholders, just as income from a proprietorship or partnership would be. In exchange for this benefit, there are limits put on S corporations. You are limited to 35 shareholders (at the time this is written - it may be changed) and they have to be individual people.

Why should or shouldn't you incorporate? You should incorporate if you need the extra trademark protection, if you have significant assets to protect, or if you want to avoid the problems of a partnership but still take other people into your company.

The liability shield only becomes really important when you have a lot of assets that would be vulnerable to business loss or lawsuit. After you get that yacht and the second vacation home in the ritzy neighborhood, you should definitely think of incorporating. In the meantime, cover your liability with business liability insurance.

The newest form of business is the L.L.C., or Limited Liability Company (sometimes shown as Limited Liability Corporation). It combines many of the features of a partnership with those of an S Corporation. It allows the reporting on personal income tax returns of the "partners", but with the liability protection of a corporation. It lacks many of the restrictions that applied to S Corporations.

Typically, you'll need two people to start an LLC, whereas a corporation in most jurisdictions can be a one-person show. Most LLC's also have an expiration date, when they will automatically dissolve unless renewed. A corporation on the other hand "lives" forever unless purposely dissolved.

For more information, I recommend you buy and read our Special Reports:

R10510 Incorporate Yourself For Less!
No need for an attorney in most cases. This report covers the requirements - the advantages and disadvantages of incorporation - and how to file at minimum cost.
R10512 Should You Be A Limited Liability Company?
L.L.C. is going to be almost as common as Inc. after business namess. Find out why - and what advantages and drawbacks this business form has. It is particularly of interest for anyone thinking of being business partners with somebody.

Insurance

If you are going to be doing consulting in a technical field, then you should also investigate whether errors and omissions (E&O) insurance would be appropriate. E&O insurance covers a higher degree of liability. Ordinary liability insurance protects against mistakes that an ordinary prudent person shouldn't have made. An example is that a prudent person would not have put a bottle of sulfuric acid near the edge on a top shelf. If you did, and it spilled, you'd be liable. If your business is delivering chemicals, you should have known that a bottle of sulfuric acid should be labeled with a particular hazardous material warning sticker. Your liability is now as an expert who should have known, not just a prudent person.

If you will be using your vehicle for business, you'll need to get a business 'rider' put on your policy, since your normal auto insurance will not cover business use. The same goes for your office. If you are homebased, make sure that your mortgage or renter's insurance is amended to include business equipment and stock that you might keep at home.

Since you are going to be self-employed, you'll need to explore business interruption, health and disability insurance. Business interruption insurance covers the bills for those times when you cannot work for some reason. Health insurance protects your most valuable asset - you - and helps pay medical bills should you be sick or injured. Disability insurance will provide for you if you are permanently unable to continue working.

You should also explore the possibilities of an umbrella type policy. This is where your different coverages, such as auto, home , fire, property and business liability coverages are bundled together, with a lower policy than you'd pay buying each separately.

Contracts

Always get any agreements in writing. It doesn't matter if you call them contracts or not. The big reason for this ironclad rule of getting everything in writing is that people are not very good rememberers. You and your client may both be perfectly honest, but six months from now both of you will remember a conversation quite differently. Get it in writing.

11. Get Informed

The mark of a great information specialist is how efficiently they can access information. One of the most efficient ways is to walk into your own library full of books and magazines, where you know exactly where to find that tidbit.

Business Library

Guerrilla Marketing, by Jay Conrad Levinson. There are a number of books in the Guerrilla Marketing series, and they are probably the best marketing books for small business ever written. Since marketing is the most important determinant of your success, you should begin here.

Other Recommended Books and Publications are found in the resource section at the end of the manual.

This comes from an old story, in which an inexperienced woodsman goes into the woods, and chops down 10 trees the first day. Well satisfied, he sleeps well but is dismayed the next day to only chop down 9. He gets a good nights sleep, resolved to work harder the next day, but to his suprise, despite extra effort can only chop down 8. So it continues, day after day putting in more effort and longer hours but accomplishing less, till a stranger comes by and tells him to take a day off and sharpen his axe. "Can't take time off," he says. But finally relents and of course after the day sharpening his axe can now chop down more trees than ever.

Certainly there are many books you can buy in the business section of any bookstore. You can also check books out from the library, although to be really useful for you they should be in your library permanently, and where you can mark in the margins, highlight, etc.

Get in the habit of browsing through the books available at second hand stores, thrift shops and garage sales. Pick up any business books you can find, and any that relate to your area of specialization.

Sharpening your axe

This is done by attending seminars on sales, on negotiation, on personal improvement, and other topics. If you find just one new technique or tip that you can use, it is more than worth the cost of the seminar. You should also get those motivational cassette tape programs and play them in your car when travelling.

They really do help. When you go to an appointment with a client, you must be at your peak emotionally, mentally, and physically. When others see you, you must appear constantly as one is happy and successful. People don't want to hire somebody who is a failure, or is looking down in the mouth.

Networking

The refusal to keep score means that you don't try to figure out who benefits more from a networking arrangement. If you have given ten leads to a contact, and helped them out in other ways a large number of times, you don't "cut them off." This is one of those situations where the more you give, the more you'll eventually get.

Your network should be continually expanding. Keep seeking more people that might be useful to you in some way - and even those whom you can see no use for. Certainly other consultants and information specialists should be in your contact database, as should leaders in your area of business and your geographic area. But so should many ordinary people.

Your entries should keep expanding not only in the numbers of people, but the variety of people. You want people from all works of life, from all areas of the country and even the world.

Your expansion should also be in the quality and quantity of data that you keep on your contacts. Harvey MacKay in his book "Swim With The Sharks Without Being Eaten Alive" talks about his MacKay 66, sixty-six things that he wants to know about each of his prospects and customers. He includes all manner of non-business related entries, such as where the contact went to school, and whether they were in the military. While these may not be directly business related, it allows you to build and cement relations. If one mentions that his daughter had just done well in a gymnastics match, you make a note of it. When you get in touch with that person, perhaps months in the future, you can ask how his daughter is doing with her gymnastics. It shows your attention to detail and makes that person feel like they are important to you.

The last key to successful networking is indebtedness. Not financial, but psychological. You want to establish a debt in people's minds - from you and to you. This simply involves asking for and providing information.

When you meet somebody new that you will add to your contact database, make sure that you get all the important data right, such as name, email, phone, etc. But also, ask them an appropriate question which allows them to help you in some way. It doesn't have to be important. Ask if they know of a good printer, or a place to get a good deal on a new muffler, etc. You'll probably get a clue of what to ask for from the contact's position and what they say. It really doesn't even matter what the answer is. The mere act of asking for help puts you to a tiny degree in their debt, and the act of giving help to you plants a psychological seed of caring for you in their mind. They will be more disposed to help you later on a more serious matter.

By the same token, if you find out the contact is searching for something or you can recommend a good deal, you help to create that subconscious debt. The more you can help, the larger the indebtedness. Remember though, never keep score!

There are of course other resources that you can tap into. There are small business development offices run by government bodies or Chambers of Commerce to turn to. The national and state/provincial governments have a large number of publications and offices to assist you in finding answers as well.

12. Get Organized

Odds are, if you are going to be an independent Information Specialist. you will be operating solo. That of course means you have to do everything yourself. You will need to have good systems in place to help you manage your time, manage projects, manage clients, and manage your own business growth.

You need to be extremely well organized so that you can put your finger on any number of facts and figure on only a moment's notice.

There are two types of people in the world - pilers and filers. You probably know which one is your natural style. If you are a methodical thinker, naturally neat, there are any number of organizing systems to help you refine your natural talent.

If you are a piler, there is only one way that works - the Pilers System http://pilers.com