The Most Common Business Plan Mistakes

Creating a business plan before diving into your new business head first will give you a much better chance of success. Here are some of the most common mistakes entrepreneurs make.

  1. Not writing a business plan

Not bothering to write a business plan is the most common mistake. Entrepreneurs tend to get too excited about their business idea and miss this important step in start-up. Maybe you are familiar with the saying, “He who fails to plan plans to fail.” Failure is the fate of almost every business someone starts without a business plan. You don’t need a full-scale formal business plan, but it is important that you have one.

  1. Not being clear about the purpose of your business plan

A business plan is your solution to the problem being how you are going to turn your business into a reality. Ask yourself why you are preparing a business plan. Is it to persuade a potential lender for a loan? To attract investors or to figure out if your idea could be a viable business? Or is your plan a blueprint for your start-up? The purpose of your plan will affect everything from the amount of research you do to what the finished plan will look like.

  1. Not doing enough research

Your business plan is only going to be as good as the research you put into it. You have to answer questions like; what are the trends in the industry? How will you counter what your competitors are doing? The more complete the answer is, the better prepared you will be. Every section of your business plan will involve research, which in most cases can be found online.

  1. Ignoring market realities

You can have the best product or service in the world but it’s not going to sell if there is no market for it. It is very important to market test your product or service. If you have a product, try selling at local venues or give out free samples to gather feedback. If you have a service, surveys and focus groups are effective ways you research your target market. Also examine what your competition is doing and explain how you are going to counter to win market share.

5. Not doing a thorough preparation of financials

There are two common mistakes people make when writing the financial section of their business plan. The first is not being realistic about expenses, people often underestimate costs. The second is being overly optimistic about your business prospects. Never let your optimism lead you to create an overly rosy cash flow. Meticulous research will prevent this mistake.

Perseverance and determination are great traits for entrepreneurs to possess, until those traits keep you from accomplishing what you should. That may be the worst business plan mistake of all.

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Challenges to Running a Home Business

There’s no doubt that starting a home business has many perks. You get to be your own boss, work how and when you want. You set your own fees, earning what you’re worth. But there are a few drawbacks that many home-based entrepreneurs forget to mention.

You’ll get less respect

Although this is a little less than it was 10 years ago, for some reason, many people don’t view home businesses as legitimate career choices. Instead, it’s something people do on the side to make a few extra bucks, or until a real job comes along.

You don’t have all the time in the world

Because you work from home, you must have time to let the cable guy in for your neighbor, pick up your sister’s kids at school, and have lunch with your mother. To avoid becoming the go-to helper, have set work hours and be a stickler to others about respecting them.

You’ll use more mental energy than at a job

While jobs do require mental energy, owning a business, in which you’re in charge of every aspect, and your success is dependent on how well you manage it. Meaning you think a lot about your business. Even when you’re not working, you’re thinking about it.

Work isn’t always fun

Even if you start a business doing something you love, there are aspects that aren’t fun. Some of these tedious jobs can be outsourced to a virtual assistant, but even then, you’ll have days where you don’t like your business.

Work is rarely ever done

Calendars, schedules, routines, and to-do lists will help you stay on top of tasks, but you’ll probably never come to the end of your list.

You’ll sit more

Because you don’t have to get up, get dressed, and commute to a job, you’ll move less. Unless your home business is in landscaping or fitness training, you’ll likely spend a great deal of time at your computer.

Work and life lines blur

Flexibility can be an advantage of running a home business, if you’re not consciously making decisions about work and off time, you can begin to feel overwhelmed and scattered. This is where time management can make a big difference in the quality of your work and personal life.

It gets lonely

The quiet and solitude of a home business are nice for being focused and productive, but it’s lonely too. There’s no water cooler for gossip or feedback from a colleague. Social media and online groups can help with this, but it’s important to make an effort to connect with people in real life.

It gets harder to go back to a traditional work situation

Once you get used to having your own schedule and working without a boss, it gets difficult to want to go back to that situation.

You’ll work too much (or maybe not enough)

Especially in the beginning, home businesses take a great deal of time to get up and running. You may not have a day off for weeks or months. This can cause problems with your family. Or, it’s possible you’ll not work enough. A home business is flexible, but not so flexible that you can make a living during your child’s nap times or working only an hour a day.

Some days you may not get dressed

Working in your p.j.s is a perk of having a home business, but spending the entire day in your jammies will make you feel frumpy. Experts suggest getting up for your home business just as you would for your job; shower and get dressed.

You’ll be home all the time

Living and working under the same roof can get tedious. On the days you don’t get dressed, also means you don’t leave the house. Fortunately, many home businesses can be run from other locations and since many public spots have free wi-fi, you can take your work on the road for a change of scenery.

 

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Steps to Calculate Start-up Costs

Whether you are trying to secure funding or you are trying to figure out what it will take to get your business up and running, an accurate estimate of start-up costs is necessary to predict financial performance for the first year or few years.

Every business has different cost requirements, but these steps will help you gather some numbers to start.

  1. Determine your start-up cost structure.

Here are six cost categories for new businesses;

  • Cost of sales
  • Professional fees
  • Technology costs
  • Administration costs
  • Sales and marketing costs
  • Wages and benefits

Think about these cost categories, how they affect your business and how they will be weighted across your business.

  1. Develop comparables

Compare industry leaders with your business’s costs. Some aspects like your revenue numbers will be different, but it will help you break down how much you should be spending on each cost category.

  1. Project start-up costs conservatively.

When calculating start-up costs, keep in mind you may need to cover expenses for a few months before you even open for business. And once you are operating, it will take time to become self-sustaining. Be conservative in the early stages with your cost projections and estimated revenue.

  1. Separate one-time costs from reoccurring costs.

Distinguish which costs you will have year-to-year like salaries and rent from one-time costs like furniture and equipment. This will allow you to establish a budget for after the start-up period.

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Choosing a Legal Structure for your Business

Which legal structure is right for your business?

Each form of business ownership has advantages and disadvantages that should be considered before choosing a legal structure for your business.

Sole Proprietorship

A sole proprietorship is a business owned and operated by one individual.

Advantages

  • It is inexpensive to register your business as a sole proprietorship in Ontario.
  • It only has to be renewed every five years.
  • Operating as a sole proprietorship means you own 100% of the business.

Disadvantages

  • You are legally responsible for the business; it is considered an extension of yourself.
  • You are personally responsible for any debts and liabilities your business incurred.
  • Your personal assets can be seized and used t o discharge the liability you’ve incurred if your business fails.

Partnership

There are three types of partnerships in Canada;

General Partnership – Each partner is jointly liable for the debts of the business.

Limited Partnership – Liability is limited to the amount you invest into the business.

Limited Liability Partnership – Is available to groups of professionals such as; lawyers, accountants, and doctors.

Advantages

  • Eases some of the liability burdens a sole proprietorship would bear.
  • Has the same tax simplicity as a sole proprietorship.

Disadvantages

  • One partner can be held responsible for debts incurred in the name of the business by another partner.
  • Without a partnership agreement, your partner could make you responsible for debts incurred.

Corporation

A corporation is a legal entity separate from its owners or shareholders.

Advantages

  • No member of the business can be held personally liable for debts, obligations or acts incurred.

Disadvantages

  • This legal structure is expensive and can be difficult to set up and operate.

Pick a form of business ownership that is right for your current circumstance, it can be altered, then review as your business grows.

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Content Marketing Checklist for Small Business – Part 2

  1. Pick the right social media platforms.

There are many social media platforms to share your content on, however that doesn’t mean you need to use them all. Pick platforms that will help you reach your target audience best. Also consider what type of content you will share. Visual content like images and infographics would fit best on Instagram or Pinterest, where as links to blog posts would fit best on Facebook or Twitter.

  1. Use time-saving tools.

There are different content marketing tools available that will help plan, research, measure and share your content. Some tools even help you write the content. Here are a few credible content marketing tools to save you time; Evernote (organization), Skyword (development), HootSuite (social distribution), Constant Contact (email marketing). Keep in mind that you should be choosing tools that have been proven to be effective.

  1. Measure the effectiveness of your content.

Once you have gone through the steps above, it’s important to remember to evaluate your content and its effectiveness. Find out how many people have viewed, shared and engaged with your content, and made a purchase. To see how your content is performing, gather this information on a monthly basis using a systemized plan. This will also help you compare your results over time.

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Content Marketing Checklist for Small Business – Part 1

Social media is a staple for small business owners who want to reach customers and forge relationships that lead to increased sales, making it the perfect marketing activity for budget-conscious business owners. It is an effective marketing tactic, however if you don’t have a consistent amount of relevant and useful content to share you could turn off your social media followers.

This is where content marketing comes into play. Follow this checklist to get the most out of your content marketing.

  1. Understand content marketing.

In order to create good content you must understand what content marketing is. The Content Marketing Institute defines content marketing as: “A strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly-defined audience – and, ultimately, to drive profitable customer action.” Meaning that content marketing is about knowing your target audience and goals, and creating content that guides them to purchase your product or service.

  1. Outline your content marketing goals.

Your content marketing goals are specific to your business and what you want to achieve, whether it is to communicate with customers, to create new relationships with potential customers, to build up your email marketing list, or to boost your credibility. Identify and understand your goals and the result you want to see.

  1. Pick the type of content you will create.

Now that you know what your goals are and what you want to achieve, consider the type of content you will create. There are many types of content such as; blog posts, videos, images, email messages, press releases, and more. Regardless of what type of content you choose, make sure it is relevant, informative and valuable to your audience and it must be consistent. Set a schedule for creating new content on a regular basis.

  1. Don’t forget SEO.

Search Engine Optimization (SEO) plays an important role when it comes to creating content. SEO is using keywords in your content to help search engines find your content when those key words are entered in a search. Focus on writing your content first, and then plug in keywords throughout to optimize your SEO.

To be continued next week…

 

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Building Your Online Reputation

Here are three key factors to develop your online reputation in the digital marketing world.

Content Creation

The most effective first step to a successful online reputation is creating great content. Customers expect a high level of effort to be put into content, especially if it’s designed to turn them into a paying customer. Many small businesses create this content through blog posts. It is great for Search Engine Optimization and gives you the opportunity to provide valuable information to your customers while boosting your online reputation.

Social Media

Your reputation on social media platforms relies heavily on your activity, your audience will forget about you if you’re not actively posting. But that’s just the beginning… Engaging with your audience can be a bigger hurdle because we’ve been taught to approach social media with a corporate perspective. Don’t be afraid to add a bit of humanity. Keep in mind that social media is meant to connect people and it works best when two people simply have a conversation.

Reviews & Public Perception

This is easily the most challenging aspect of managing your online reputation and also the most important. Online reviews have been a huge factor in determining the online reputation of a business. To the modern consumer, digital word of mouth is a very persuasive way of marketing. It’s important to pursue positive reviews, convincing customers that have had good experiences to write reviews.

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