The successful entrepreneur is generally more inclined, once a business idea is selected, to sharpen the concept by a detailed planning process. The result of this step is a comprehensive business plan, with its major components being the marketing “mix,” the strategic plan, operational and logistical structures, and the financial proposal. The purpose of the business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.

The business plan is the “blueprint” for the implementation process. It focuses on the four major sub-plans: marketing; strategy; operational/logistic; and financial. While the business plan often goes through some revision, it generally represents a rather advanced stage in the planning process. The primary product or service to be offered, based on the results of the market research, should be determined. Whether the business will be a start-up, purchase of an existing business or a franchise should certainly be firm at this point. Often, a specific business location is indicated, or at least a rather specific area.

Time estimates in a business plan should allow for meeting all the necessary regulatory requirements and acquisition of permits to get to a “customer-ready” condition. The amount of funding required and a general approach to raising these funds should be determined. Marketing mix issues focus on how the product or service is differentiated from the competition.

A business can differentiate itself on any of what are often referred to as the “four P’s” of marketing: product characteristics, price structure, place or method of distribution, and/or promotional strategy.

Strategic issues relate broadly to the company’s mission and goals. Every venture must continually assess its strengths and weaknesses, the opportunities to be seized, and any threats to the success and plans of the business. Operational issues relate to company structure, and the scope of the business. The operational plan addresses tangible items such as location, equipment, and methods of distribution. Decisions on these issues largely determine startup costs.

The financial proposal includes an estimate of the amount of money needed to start the venture, to absorb losses during the start-up period, and to provide sufficient working capital to avoid cash shortages. It projects sales and profitability over some period into the future, generally 3 to 5 years. Where outside funding is sought, it also describes distribution of ownership of the venture and methods of debt repayment and/or buyback of partial ownership.

Where implementation of the plan requires participation of lenders and/or investors, the plan must clearly and convincingly communicate the financial proposal to the prospective stakeholders: how much you need from them, what kind of return they can expect, and how they can be paid back. Many entrepreneurs insist that their business concept is so clear in their heads that the written plan can be produced after start-up; this attitude “short-circuits” one of the major benefits of producing the plan. The discipline of writing a plan forces us to think through the steps we must take to get the business started, and, to “flesh out ideas, to look for weak spots and vulnerabilities,” according to business consultant Eric Siegel.

A well-conceived business plan can serve as a management tool to settle major policy issues, identify “keys to success,” establish goals and check-points, and consider long-term prospects. The plan must realistically assess the skills required for success of the venture, initially and over the long run, and match the skills and interests of the team to these requirements. Test the plan, and an accompanying oral presentation, on friends whose business judgment you value. Let them assume the role of a prospective investor or lender.

Do you know what to look for in a sales person?  Most sales applicants can present  a lot of reasons why they will be great for you . Suggest you might be hiring on straight commission and see what they say… If they are from your industry, they will tell you about all the business that they can bring with them. Usually you can discount that by 50-100%.

Do your sales people have a passion for sales?

If your sales people do not… Rule #1 : Suggest that they seek employment elsewhere. Rule #2: Replace them them with people that love sales. If a sales person does not love selling, they will rarely bring you sales success. You do not want “order takers.” Unsuccessful sales people will give you reasons why customers will not buy from your company. Rarely will they say that they really do not know their product or are not really putting in the necessary time or effort. If they are not doing the job, shame on them and shame on you. You cannot afford to keep them on the “if come.”

Take a long hard look

Do you know what to look for in a sales person? Most sales applicants can present a lot of reasons why they will be great for you . Suggest you might be hiring on straight commission and see what they say… If they are from your industry, they will tell you about all the business that they can bring with them. Usually you can discount that by 50-100%.

Some companies prefer little or no experience, so they can train the new sales people properly and do not have to overcome bad sales habits.. . Because an applicant has been with 5 other companies does not mean good experience, it usually means failure.

The best sales people

Having trained & worked with 1,000s of sales people, I have noted 4 traits that the most successful have in common:

1. They love selling. (are passionate about)
2. They have worked very hard to know everything about what they are selling (this is crucial).
3. They are enthusiastic and optimistic.
4. They put in a lot more time and effort than the “average” sales person (who sells far less).

Note: None of the above mentioned were “born sales people.”

For help with your sales organization, contact SCORE.org or your local chapter of SCORE.

Bill Haman, SCORE Cincinnati

The basic rule is simple: “Find a market need and fill it!” The process of finding the need, and the method chosen to fill it are where the difficulties arise.

Based on an opportunity scan, does the market need a product or service that is not currently being provided? Is there a needed product or service currently being provided in a less than satisfactory way? Is some particular market being underserved due to capacity shortages or location gaps? Can we serve any of these needs with some competitive advantage?

Remember that a business idea is not a business opportunity until it is evaluated objectively and judged to be feasible. You may wish to choose two to five of the ideas that seem most promising for more detailed study. Trying to consider too many would spread your time, energy and focus too thin. At the same time, if you focus too early on only one business idea, you are more likely to become “attached” to it, and could lose your objectivity.

Testing the feasibility of your top business ideas involves time and effort to collect key information. A first pass might consist of consulting recent journal articles that evaluate the market of interest; most libraries have computer-based indexes of periodical articles, such as InfoTrac. Other useful library resources include industry trade books, directories, and other sources of industry statistics.

Craft an entry strategy. What type of business could best seize the chosen opportunity? Would taking in partners with complementary skills enhance my chances for success? What would be the optimum location? Whom would we serve, and how? Would my chances be improved by buying a franchise or an existing business, as opposed to starting a venture “from scratch?”

A small business is the usual product of entrepreneurship. Can a person start a large business? Only 4% of businesses employ over 20 people at start-up. What kinds of businesses are the larger start-ups likely to be? My sense is that most would be food service businesses, and many of those would be franchises.

Over half of business start-ups consist of 1 or 2 employees. What kinds of businesses can you enter with only 1 or 2 employees? Most would probably be considered professional practices (medical, law, accounting) rather than commercial businesses.

Small businesses are characterized by independent management, closely-held ownership, a primarily local area of operations, and a scale that is small in comparison with competitors. Many are small by design, or are “lifestyle” businesses, where the primary objective is employment for the principals.

Many are intended to be more “entrepreneurial ventures,” with the intention of generating substantial growth in scale of operations and profitability. Successful entrepreneurs craft such an idea into a business concept that, hopefully, fills a void in the marketplace. You should enjoy your concept and be excited enough to relay your feelings to your market.

Your concept does not need to be a major breakthrough. It could simply be an improvement to an existing product or service. The improvement could be as simple as better service and/or quality than is currently available, a faster or otherwise better method of delivery, or a technological improvement.

Solicit input from friends and other consumers of the product as currently offered. Ask questions like: Is there a need? Would YOU buy it? What price would you expect to pay for it? Is there a better way to provide it?

Check out how the competition is providing the product to the market. Determine what makes your concept different from the competition. Why would the market be better off doing business with you? What can you give the market to improve their experience with the product? Does your product or service exceed the expectations of the market?

Define the needs of your market by listening to prospective customers and understanding how your product might fill that need. Is there something more you could do, to make it more attractive to your market? Is your product a solution to a problem in your market? How will you handle customer service complaints? What are your guarantees to your customers?

Statistics show that 80% of company sales come from repeat orders and referrals from satisfied customers. Exceed your customers’ expectations and they will be back, and they will refer you to others.

Refining and improving your concept is an ongoing process. Maintain a high profile in your community to develop relationships that help promote the product and serve as a referral and constructive feedback network. This involvement will only produce these benefits, however, if you are sincere in your willingness to work hard for the community you live in. If you don’t the available time to offer your community, perhaps you could give your product as a gift to local charities or sponsor a local event where your community would benefit.

What kinds of people start businesses? Their skills are seldom different from those of people who succeed at working for others. The more successful entrepreneurs tend to be proactive, assertive, and highly observant.

Why do people start small businesses? The most frequently cited motivation for business start-ups is to allow the entrepreneur to achieve independence; money is secondary. Is this surprising? The other reasons named most often are that an opportunity presented itself, a person took over the family business, or the person simply wanted to be an entrepreneur. Identify your motivation.

For context, what reasons might people offer for joining a large corporation? For choosing a government career? A union job? Certainly, many people desire security, fringe benefits, and a predictable career “trajectory.”

What kinds of people start businesses? Their skills are seldom different from those of people who succeed at working for others. The more successful entrepreneurs tend to be proactive, assertive, and highly observant. They are efficient, quality-conscious, and good at planning and procedures. As business operators, they are committed to “partnership” with employees, customers, suppliers, and their community. Would these skills or personality traits lead to success at any professional pursuit?

Most entrepreneurs value control, freedom, flexibility; and self-reliance. They generally desire responsibility and personal fulfillment. Most entrepreneurs are not “gamblers;” they have a preference for moderate risk (What is the largest financial risk that you would consider moderate?). They are always searching for opportunities, and willing to pursue some.

These are merely general characteristics. How might we apply them to our own fitness for, and commitment to, the entrepreneurial lifestyle? We need to ask ourselves some tough questions:

Do I really want to start or own a business? What are my real reasons for considering going into business? The motivation must be strong enough to sustain you when the excitement of the startup has passed, and the everyday grind begins.

Is there a product or service that fits my talents or desires? How should I address the opportunity? About 65% of new businesses are startups, 30% purchases of existing businesses, with the remainder inherited, promoted or otherwise brought into ownership. About 11% of the businesses operate under a franchise name.

Am I ready yet? Why do you think so many new business founders are in their 30s? Perhaps it is because they have enough experience to be confident, yet are still flexible enough to take some risk. Do you think entrepreneurs are born (demanding parents, ethnic tradition) or made? Is it for you? If so, identify what additional skills or knowledge would increase your readiness.

For women and minorities, there are additional considerations relevant to their chances of success. Do they have to be “better” to make it, or is entrepreneurship the only true meritocracy? Is any disadvantage only at startup?

Do I have an adequate support structure? If you have a spouse, or are relying on some other form of family support, make sure that they understand the sacrifices involved and the pressures these will put on relationships.

Can I place developing this business over other interests and goals for the foreseeable future? Am I willing to take on the personal demands of entrepreneurship? For example, can I work a full day as an employee of another firm, then work at my coffee shop evenings and weekends until it can support me full-time? There is more to life than work, and maintaining a balanced and healthy lifestyle can be a challenge for the self-employed.

Can I muster the resources to make the venture a success? Do I respond well to continuous pressure? Once I make the venture a full-time pursuit, can I live without a regular paycheck, a predictable work schedule, and for a while without vacations and other benefits? Even after startup, business concerns seldom end when you lock the door at closing time. Am I prepared for the possibility that I might lose my money and property, and damage my health and self-respect?

There are no right or wrong answers to these questions, only those that best reflect your feelings on these issues. Similarly, if your feelings indicate that you should not take the entrepreneurial path, it is certainly not a sign of weakness or any other sort of deficiency. It is more likely a decision that reflects the best life-work balance for you.

Traffic-Driven Web Sites.

Everybody has witnessed the success of social-networking sites like Facebook and popular blogs that generate all their revenue off advertising. But as the Internet ages, that’s much harder to accomplish, says Martin Zwilling, a start-up consultant in Fountain Hills, Ariz., who specializes in helping entrepreneurs find angel investors.

Zwilling says he hears pitches for new social-networking sites about once a week, but actively deters people from starting them. “I say, skip it,” he says. “You need to invest $50 million to get any presence” in the social-networking space right now and it’s very difficult to get people to leave established sites. What’s more, he says, the amount of traffic needed to build a lucrative traffic-driven Web site is far more than most new Web entrepreneurs realize: “Until you get to the point where you have a million page views a day, you’re nowhere.”

Franchise Ownership.

The idea of being handed a proven business plan without the uncertainties and headaches that come with building a business from scratch is understandably alluring. But too many people don’t understand the risks associated with franchising and sign restrictive franchise agreements without thoroughly researching their franchisor and their contractual obligations, says SCORE’s Yancey.

Some franchisors, for instance, allow franchisees to open stores too close together, oversaturating the market. Or they simply require their franchisees pay so much in royalties and fees or other operational costs that it’s very difficult to be profitable. Beyond that, when a franchisee fails, a franchisor may make it extremely difficult and costly to get out of its contract.

It’s a myth that franchises are far more successful than independent businesses. A 1995 study by a researcher at Wayne State University found that 62% of franchises were open for business after four years, compared with 68% of independent businesses. And franchises were also found to be less profitable in those early years.