Business Plan | David Chan

I have plenty of small business tips for the neophyte who is just starting out. Over my career I’ve probably started a dozen or so small businesses. Of course, not all of them have been successful, but I’ve learned a great deal about what to do and what to avoid. Probably the most important lesson that I’ve learned, though, is to not get too far ahead of yourself. There’s nothing wrong with thinking big, but every million dollar home run started with a lot of strikes and lucky singles.

The best small business tips come from careful planning. What do I mean by this? I don’t necessarily mean writing detailed business plans and complex spreadsheets, but really understanding the market you’re trying to address. How large is the market? Who are your competitors? Where can you find customers? I find it funny when people tell me of their next great idea and say that there’s no competition out there for their product. To me, that’s a bad sign. No competition could very well also mean nobody wants your product or service.

So, careful planning involves researching the viability and desirability of your product or service. The great news is that with the Internet, you’re able to dig pretty deep to find answers to your questions. For example, very few people realize the power that is at their fingertips with Google’s search engine and its advanced search options. In addition, Google has several tools that allow one to see “trends” and anticipate what people might be interested in. This tool is found at www.google.com/trends.

Other small business tips related to planning are creating proformas. A proforma is essentially a listing of all your sources of income and your expenses. This is where most small businesses fail. They (and I count myself in this category at times) put their rose colored glasses on and think that “all is good.” I’m going to sell TONS of this stuff and get rich. But, the devil is in the details. For example, how long will it be before you get paid? Do you have to extend credit or cash before you get paid? If you’re not paid for 30 days and you have to pay to get product immediately, you could have a cash flow problem.

A proforma does not have to be complex. In fact, the simpler, the better. As your company matures, it can get more sophisticated, of course, to keep up with the dynamics of your business. The most important small business tip here is to really look at and manage your expenses.

I was with a small startup company in the Valley that raised an astronomical $100 Million, while I was with them. Within a few years or so, the company had less than a tenth of that amount left. The reason? Virtually no sales, high payroll and expensive offices.

Whatever can go wrong, will go wrong! Have you ever heard of that phrase? My advice is to always have a contingency plan. If this product or service doesn’t fly, do I have enough cash to try another approach or how can I jettison a bad idea for another?

There are many more small business tips that I’ll share in the next article, especially as they relate to small business tools that will save you money.

Read more articles from David Chan

Every day layoffs are in the news around the country. No one right now is feeling secure in their job. With the recession in full bloom and housing still in the tank, there will likely continue to be more layoffs. However, in contrast, Internet businesses are enjoying an uptick. The old fashion way of building a small business “brick by brick”, i.e. the brick and mortar way, requires sizable overhead investment. Starting a business online can be accomplished literally on a shoestring. If you’re struggling to make ends meet and unclear about your future, perhaps now is the time to think about building an online business.

It does take some time, understanding and work to get an online business going. However, it will pay off in spades if run correctly. In fact, it could be a profitable venture in a shorter time than trying to build an “offline” business. One way to fund your online business, if you’ve suddenly found yourself unemployed, is to use unemployment benefits to bridge your income shortfall. Of course, consider searching for a “traditional” job in parallel. Craft your strategy correctly, just like you would
if developing any business plan in the traditional world.

There are literally tens / hundreds of thousands of online business. So, it’s clear that you must think outside the box. If you’ve been an account in the past, consider offering online bookkeeping services or consulting with clients for on how to structure their accounting systems. What if you were an application developer in the past, perhaps you can offer your help through online bidding services such as Guru.com or RentACoder.com. These services are great for giving you a baseline of potentially unlimited short-term engagements.

Many people would just brush off building a business online as “too hard.” This is especially true if they’ve never done this before. But, the real question to ask yourself is “what do I have to lose, except time?” Let’s dissect a few of the components. Buy a domain name, build a website or use an existing site / blogging service such as WordPress, and start advertising. You should spend a few hours every night writing about what you enjoy most. Explain to your audience about certain techniques, what actions work best, where to get more information, etc. Once you start, you’ll find it amazing how much knowledge you really do have about the subject.

Of course, you have to realize that regardless of how small your business there will be competition on the Internet. The Internet has something approaching 400 million websites, give or take. But, the beauty of this is that you have the opportunity to check out your competition. You can figure out what they are doing right or wrong and create your own unique products and services.

On the flip side of the coin, if you are not a proficient web designer, you might hire one of these people off of the services listed above: Guru.com or RentACoder.com. These services provide ratings on the coders within their portfolio. It makes it much easier to pick a competent web developer.

Again, just like any business, be sure you know your objectives. The Internet should be a “one-action “model. Don’t confuse the issue with creating too many “personas” or themes about you or your offering. You will end up confusing the audience / paralyzing their thought process and they will end up not buying. Make sure you have quality content on your site, as well.

Marketing will be a key component to a successful launch of your business. I like to say that you can build a website, but if no one knows that it’s there, does it really exist? Remember you ARE competing with millions of other websites. At a minimum, you are competing with thousands of business in your category. How will you stand out? What are your unique selling points? Are you relevant?

Marketing your website is probably the most difficult aspect of starting a small business online. By the time you’re ready to launch your site, you need to be prepared to invest some bucks in bringing your small business to the attention of the world.

In the end; however, this small investment could be the biggest you’ve made to be in control of your own future. This is probably the best time to invest in your tomorrow’s future by developing your own business.

Small Business Tips for the Neophyte

Business Development In A Slow Economy: Small Business Is Where It’s At