May 2009

VCs and Business Plans and Molehills

by Tim Berry on May 15, 2009

So this week we get it again: another business publication with a poorly conceived rehash of a misguided academic study saying venture capitalists don’t read business plans.

Why poorly conceived? Why misguided? And why a molehill?

The molehill reference is to the old phrase about making a mountain out of a molehill. In this case it’s making a molehill out of something much smaller than that.

The journalists like that study because it seems like the conclusion is contrarian: It seems to deny what everybody assumes is true. Specifically, it seems to question the usefulness of an entrepreneur developing a business plan.

But the truth is that the business plans that entrepreneurs should write, review and revise frequently were never really there just for VCs to read or not read. They were there to figure out what’s supposed to happen, when and why, how much it costs and who’s responsible.

The business plan is for you to plan your business. Whether somebody else reads it or not, you need to know what you’re talking about; and if you don’t have a plan, it shows.

So it’s a ruse, really: To say that VCs don’t read business plans is like saying audiences don’t read screenplays. The VCs get the results. The plan is for the entrepreneur.

Oh, and by the way, that study they’re citing lately, done at the University of Maryland–it was done almost 10 years ago at the height of the dot-com boom, when it wasn’t clear that VCs were reading anything, let alone business plans.

And of the million or so new businesses that start up every year, only about 5,000 of them are financed by VCs.

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Ask Seth Anything

by Chelle Parmele on May 14, 2009

On May 11th, Ted.com gave people the opportunity to ask Seth Godin anything.

And they did. And Seth answered.

This one I particularly liked:

How can small business coffee shops survive a Starbucks next door? — Pascal Lacroix

By being not only different, but better in ways Starbucks cannot. You can’t win by imitating them. Consider having a membership fee, or a different social group. Serve a different item, in a different way, at a different price. Emphasize the ‘Cheers’ friendly element over the ‘get in and get out’ mindset. Exclude certain people or practices. Offer clothes or community performances … stuff they can’t do!

You can read the rest of the questions and answers by going to the TED website. Ask Seth Anything

‘Chelle Parmele
Palo Alto Software

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What Obama taught me about social media

by Chelle Parmele on May 13, 2009

I’m happy to bring to your attention a brand new article on bplans.com by one of our newest contributors, Maisha Walker.

Maisha is the Founder & President of message medium, a 10-year old New York City Internet Strategy firm that focuses exclusively on Small Businesses. You can follow Maisha on Twitter or learn about her upcoming Web site and Internet Marketing Classes.

She will be a regular contributor to Bplans.com and the Business in General blog over the next several months. And her first article on social media marketing is one not to be missed.

“I was fascinated by the analysis of the Obama campaign. In many ways, Obama’s campaign and its success is a big, bright, “LCD sign” of the times. New media has come of age in a very public way.”

Enjoy! And welcome, Maisha!

‘Chelle Parmele
Palo Alto Software

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Oregon Business Success Stories: Video Series brought to you by the OSBDC

by Chelle Parmele on May 13, 2009

Another great video from our friends at the Oregon Small Business Development Center Network.

The Vocal Booth is a five year old company that started up in Calvin Mann’s apartment. After Calvin created the first booth to keep his neighbors and landlord happy, he realized there was a need in the industry for the product and went after it. He’s grown the company from 1 to 13 employees and his products are offered worldwide.

Watch the video on YouTube

VocalBooth.com™, Inc. manufactures state-of-the-art portable vocal booths and sound isolation enclosures for the professional and home recording studio, as well as for the audiology, scientific testing and industrial sound dampening industries worldwide.

As always, we’d like to thank Mark Gregory and the new State Director, Mike Lainoff, for the opportunity to share these Oregon success stories with you.

Did you miss a video? OSBDCN Success Story Videos

‘Chelle Parmele
Palo Alto Software

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10 Things I Hate About Your Business Plan

by Tim Berry on May 12, 2009

My business plan reading marathon continues. With the main intercollegiate business plan contests done we head for the home stretch with the angel investment group I’m in. I wrote some comments on business plans in 10 Things I Hate About Your Business Plan, which I posted on the American Express OPEN forum.

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A Marketing Tool that Works Day and Night — 24/7

by Guest Author on May 11, 2009

You expect a business to have a telephone. Well, these days, a business is expected to have a web site as well—it’s a credibility issue.

computer-guy And although it’s a complicated subject, once launched, what could be easier than using the internet to spread your marketing message, educate your prospects, and convert prospects to clients?

In the early days of the web, businesses thought they could just put up a site and expect the phone to ring. A successful web site today is a tool that integrates and connects all of your marketing efforts. It’s where your prospects begin the process of knowing, liking and trusting you and your business.

A properly constructed web site will:

Build awareness – it’s where many prospects start their search for what you’re offering.
Shorten the Selling Cycle – prospects get to know you, your business and your product before they even meet with you.
Provide Access to Information – prospects in the market for your product or service can find out what they need to know any time they choose.
Become a Referral Tool—people recommending your business can simply refer the prospect to your web site as an easy starting point.

Forget about a home page with some lame “welcome” message—get right to the facts of the matter with a compelling headline about how you solve your prospects’ biggest problem or frustration. Keep the copy short and to-the-point and include pages on:

Your Difference – why dealing with you is a better experience than with your competitors.
How You Work – some information up front will help your customer to know what to expect if a transaction takes place.
Your Story – this humanizes your business—customers like to know how the business got started and how it has evolved.
Your Ideal Client – sure, go ahead and describe the kind of customer who really benefits by doing business with you. That way, prospects will know where they fit with what you’re offering.
Your Products/Services – of course this is all-important. Give brief, but accurate descriptions and pricing—show pictures where applicable.
Case Studies – these help prospects visualize what the product or service might do for them and they are proof of your success with others.
Client List – if applicable, list your satisfied clients. This is also a good place to work in some client testimonials—further verification of the worth of your product.

Every page should have your contact information: name, telephone, fax, email and your address—why hide it until the end?

Now there is much more to a web site than we’ve covered here—design, navigation, linking strategy, blogs, and search engine optimization to name but a few things. We’ll get to those in other articles. But for now, start thinking about your new or revised web site, because if you’re not harnessing the internet, you’d better prepare to become obsolete.

ducttapemarketingbadge Ken Burgin and Elizabeth Walker are the Marketing Masters (www.MarketingMasters.ca), a full-service marketing and advertising partnership that helps build busy businesses. Send your ideas on How to Thrive in Times Like These to liz@marketingmasters.ca or ken@marketingmasters.ca, or call 1-866-908-5720.

web: http://www.marketing,masters.ca
blog: http://thebuzzwithkenandliz.blogspot.com/

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Twitter Chats on Small Biz Technology

by Tim Berry on May 11, 2009

I’ve been joining the #sbbuzz chat on Twitter lately, Tuesday evenings. I’m finding it a nice way to get in touch with a lot of people at once with an interest in technology in small business. I guess Twitter is controversial in some circles, but I like it and use it a lot.

For example, click here for the transcript of a recent chat on business planning and funding for new businesses.

And you can click here for instructions on how to participate in the sbbuzz Twitter chat on Tuesdays.

And from last week, the group produced this list of good small business blogs.

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Why Small Businesses Won’t Double Their Revenue This Year

by Guest Author on May 9, 2009

Part of the fun we have in our practice is hanging out with small business owners. These people are smart, driven, competent and experts in their chosen industry. We always learn something, and we are always in awe of how successful they are at doing something we couldn’t imagine even understanding, let alone doing for a living.

But they all have something in common — they work really long ho dollarsign urs, they think about work constantly, and they worry—a lot.

This is where we come in. We may not understand how to run a fabricating plant, but we do know why prospects agree to stay in touch; why people buy things and why customers decide either to stick around and spend more of their money or leave, taking their business with them and telling ten of their friends why they should do business elsewhere.

Here is what we have learned are the biggest reasons why small businesses will not double their business this year (yes, this year—even in the current economic climate):
1. They don’t know who their ideal customers are. These are the customers who pay on time, give you most of their budget and can recommend other people just like them.
2. They don’t create best customer relationships that lead to a constant stream of referrals—great high margin business with practically zero cost of sales.
3. They lose sight of their prospects. These days it takes at least seven touches before a prospect tries you for the first time—and it can take fifty, or even a hundred. Most small
businesses stop at four, sometimes two.

And of course they do! Who has the time, the sales force and the money to pursue leads that may or may not pan out?

Well, take a look at this: 99% of small businesses do not consistently follow up with their prospects and customers. And this leaves a whole lot of money lying on the table for your competition to grab hold of.

For example: if your average sale is $10, and you have 1,000 people coming into your store four tines a year, that’s $40,000 in sales. If you could get half of those people to make one more visit, you’ve just grown your business by 12.5 percent.

Here’s one more: if you have 100 prospects, maybe 25 are “hot” and maybe you close 25 percent of them, or six people. If you could increase your close rate from 25 percent to 35 percent, you would now have nine customers—a 50 percent increase.

If on top of that you could increase your “hot” leads from 25 to 30, you would now have ten new customers—a 66 percent increase. The variables may seem small, but you can see how things start to multiply.

Of course you’ll need a system to do this, and we’ll be writing more about how to install one in future articles.

web: http://www.marketing,masters.ca
blog: http://thebuzzwithkenandliz.blogspot.com/

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What Kind of Business Plan Do I Need?

by Tim Berry on May 8, 2009

This is a five-minute answer in video to a very common question.

If you can’t see the video here, please click here to go to the source on YouTube.

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How Do I Forecast For a New Product?

by Tim Berry on May 7, 2009

This question comes up frequently, so I was asked to do a quick video for bplans.com. I did it just a couple of weeks ago, and it seems like it could be of interest for startup entrepreneurs, here on Up and Running as well.

If you don’t see the video, please just click here to go to the source video on YouTube.