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SCORE ExpertAnswers 

December 2011
7 Tips for Strong Business Plans
Cynthia McCahon
Founder, Enloop
Expert Advice for Small Business Owners

Enloop has helped thousands of small business owners develop strong, dynamic business plans. This month, Enloop founder Cynthia McCahon provides expert tips on effective planning for startups and established businesses. 

 Download: Writing Strong Business Plans


Q: What have you found to be the biggest obstacle toward moving forward with a small business idea, and how can it be overcome?

  

A: The single biggest hurdle that people confront when they consider launching a new business is not knowing if their business idea is truly a good idea. Can they support themselves and their family? What's the likelihood they'll succeed - or fail? Most people aren't trained accountants, and struggle with understanding the principles behind financial forecasting. Getting a SCORE mentor to help evaulate your business idea is a great first step.


Q: Even with products like Enloop, a business plan is only as good as the research and information the user provides. What are some "must haves" that every aspiring entrepreneur needs before getting started?

  

A: Start by identifying what problem you're solving with your product or service and then define the customer profile that benefits from your solution. That's your market. It's your job to know how to provide a better solution than the competition.


Q: Similarly, what are some mistakes to avoid?

  

A: Assuming that you'll be successful is the most common mistake, particularly among first-time entrepreneurs. This is closely followed by not correctly forecasting financial projections. Entrepreneurs can increase their odds of succeeding by letting the financial model inform their decision making.

Sometimes the harsh reality is that a business idea may not be the basis for a strong business model. Entrepreneurs need to be able to make that tough call.


Q: What are three key elements every business plan needs?

  • Know your industry's average financial performance statistics. Using the North American Industry Classification System (NAICS) code for your proposed business, you can see how your financial projections measure up to how the rest of the industry performed. If you're over- or under-projecting your financial forecasts you might be in for an uphill battle in creating a successful business.
     
  • Know your Cost of Goods/Cost of Services. Find out exactly how much you'll pay to source or manufacture your product, including delivery. Your retail price should have an adequate markup over what you paid for the product.
     
  • Know the competition's retail price. If you're priced higher, you'll have to justify why customers would choose your product over theirs. Stress the product's qualities in your marketing message and make sure the customer understands the added benefits.


Q: A business plan requires a tremendous investment of time. How do you balance pursuit of your entrepreneurial future with current "day job" responsibilities?

  

A: Leaving a "day job" that provides for your family is a hard decision. Make sure the business you're planning can drive enough net profit to support your family's needs. The important element here is to not ignore the financial forecasts and cash planning for your entrepreneurial business.

The number one reason businesses fail is because they run out of money. Take a basic accounting class, eliminate the fear factor, and put yourself in control of your future.


Q: Enloop is a great tool for assembling and evaluating a solid business plan. How can working with a SCORE small business mentor make this plan even better?

  

A: Sometimes the hardest part is in addressing what you don't know. Simply talking through your idea with a SCORE mentor is an excellent place to start. Sharing your business plan, section by section, with your mentor helps you tackle each important component in stages. This gives you a chance to incorporate feedback from your mentor.

Writing a business plan can be a bit overwhelming. Enloop helps by doing the heavy lifting for you. Having a SCORE mentor's input is an invaluable resource during the entire process.


Visit SCORE.org today to connect with a mentor and get help with your business plans. 


Sponsored By

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Free Online Workshops
  

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Tips & information on using your business plan as a strategic tool.

 

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Explains the difference between a strategic & a business plan.

 

Creating a Competitive Advantage

Learn to distinguish yourself from the competition.

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