How to Write a Business Plan

Your business plan is an essentially part of your small business success strategy. It is a vital document that lays out all of your professional goals and the means by which you intend to achieve them. It is what brings your business out of the concept phase and turns it into an actionable reality.

It is very important that you write a business plan for your own small business. With it, you can focus your ideas into realistic techniques and goals, with a proper plan, and achievable – but not too unchallenging – goals. It is what will keep you on track and motivated throughout the growth of your business.

Furthermore, business plans are commonly required by investors, banks, the government, and other lending institutions from whom you will be requesting financing to help to get things off the ground.

There are certain steps that you will need to take in order to prepare to write your business plan. These are:

o Identification and narrowing down of all of your business objectives

o Thoroughly researching all of the different points within the business plan

o Write out a rough first draft of the business plan

o Go over the rough draft and divide it into key sections

o Apply realistic financial projections to the plan

o Obtain feedback regarding all of the elements of the business plan.

The elements of your business plan should consist of the following:

o Vision – answer the question “why am I creating this company?”

o Mission – answer the question “what benefits will my products or services provide to my customers?”

o Goals – answer the question “what are the short-term and long-term goals of the company?”

o Introduction to your business – examine and discuss the following points:

(1) An overview of the industry of your business, your business history, and its operations strategy.

(2) An introduction of the key people in your team.

(3) Your current market, including its size, the opportunities you have, the challenges you face, and the growth pattern.

(4) Competition and alliances, including strengths and weaknesses, and strategies.

(5) Target market.

(6) Identification of your clients in terms of their needs, demographics, and purchasing habits.

(7) Your products and services as well as their revenue streams.

(8) The image, experience, or lifestyle you’re selling

(9) Placement

(10) Where your product or service will be available for purchase

(11) Pricing

(12) Your promotional strategy

Operations – including its functioning involving the following points:

o What the business will accomplish everyday.

o Current and future projects in the works.

o Successes and challenges faced so far.

o Overall strengths and weaknesses of the business

o Internal operations issues

The Team – including the people who will be working together in your business, covering the following points:

o Who is responsible for what?

o Is there the right number of people in your business for getting the job done?

o Strengths and weaknesses

o Internal successes and challenges

STEP – also known as the external analysis. This includes:

o What trends are affecting your business in the following areas: social, technological, economical, political.

Opportunities – what is available to your business regarding the following points:

o The size of your prospective market

o How much growth opportunity your business has

o Your market niche

o Changes in operations

o The structure that would be required in order to allow for growth

Concise statements of opportunities for your business

Plan of action and strategy – including:

o What does your business require for achieving its long-term goals?

o What challenges does your business face before reaching its long-term goals?

o What actions will you take in order to achieve your business goals?

o Why have those actions been chosen? How do they complement your vision?

Assumptions – examine these points:

o List all of the assumptions that have been made within the writing of your business plan.

o List soft assumptions – that is, those that have been made but which are not quantifiable.

o List hard assumptions – those that are quantifiable.

Financial projections – including:

o Cash flow statements from the past two years through until the next two years.

o Income statements from the past two years through until the next two years.

o Balance sheet from the past two years through until the next two years.

o Create each of these statements with a high, medium, and low sales estimate.

Executive summary – this section should be written as following:

o A summary of your business plan

o This section’s size should consist of approximately 10 to 15 percent of your entire business plan.

o This section should always appear at the end of the document

o Key points should be highlighted

o Consider this section the most important of the entire document.

As you can see, a business plan requires a great deal of work and planning, however, it is likely to be the most important document that you will create throughout the entire life of your business. Therefore, it is well worth doing, and doing well.

What You Need To Know About Investing in Penny Stock

Penny stock is the term pertaining to stocks that are traded for less than a dollar. At present, most penny stocks have upgraded their starting investments to at least $5 per share. The Securities and Exchange Commission or the SEC has then changed the definition to accommodate the stocks that still have less than $5 minimum per share. But even so, the term penny stock is still being used by the industry because the notion that stocks are still sold for a dollar per share is still what most of the misinformed have in mind.

Investing in penny stocks may seem to be a very lucrative and appealing deal for anyone because, hey, you will never know how far your one-dollar might get you. However, no matter how tempting and profitable investing in penny stocks may appear to be, you must first know the ins and outs of penny stocks before you let go of your dollar.

When you invest in penny stocks, you are generally investing on the company’s market capitalization. A market’s capitalization is different from its stock prize and calculated by multiplying the amount of shares outstanding by its stock prize. The amount that you’ll get from these figures will give you the total value of all the company’s shares at a certain particular time.

What you should be wary about when investing in penny stocks is that the smaller the market capitalization of a company, the easier it is to be submerged in liquidity issues. If a company has smaller shareholders (probably because of the undesirable total value of a company shares) then it will not trade as much shares as any larger company would. The stock price will make it less “liquid” or less flexible and more likely to be affected by changes in the demand and supply of stocks.

A non-liquid stock can also mean that the stock you bought by investing in penny stocks can be difficult to re-sell. You may have to lower your prices just to be able to let go of these investments.

On the up side, investing in penny stocks may also be beneficial by a long shot because even with a low capital, there is still a potential for your investments to gain rapidly. Even so, it is very risky to be investing in penny stocks because as the saying goes, the higher you fly, the harder your fall will be.

Another problem that you may encounter when investing in penny stocks is that most of the companies involved in this type of trading are fairly new players on the business. A new company may not be as well-established as a company that has been on the market for a respectable number of time. It may also not be that easy to get hold of the company’s history. Besides, the company’s accomplishment will virtually have nothing to compare with if it has just been established recently.

The companies involved in investing in penny stocks may also be old companies that are nearing bankruptcy, which means a near bankruptcy company might probably have a poor performance record.

Most of the companies that deal with investing in penny stocks are also not required by the SEC to file and in turn are not scrutinized publicly. This means that their stocks are not regulated and represented on the New York Stock Exchange and the Nasdaq exchanges.

Now with all these information presented to you, it is now your choice whether you will get involved in penny stock investing. Just be sure that you know the risks and the gains before you give up your dollar (or two) as you invest in penny stocks.

Real Estate Investing – How to Get Started

You’ve heard the stories about people making millions in real estate, so is it really any surprise why so many people view real estate as a serious investment vehicle? Real Estate investing offers more security than the stock market and provides returns of at least equal magnitude, coupled with attractive tax benefits. Apart from that it really does sounds cool to be ‘in real estate’. Let’s face it, anybody can trade stocks from their phone or home computer. Real estate investment, however, is a real head turner whenever it comes to tangible assets.

One of the greatest challenges in real estate investment is finding the money up front to acquire your first real estate investment property. Surprisingly, though, this is not your biggest obstacle. That’s right! Finding the cash upfront is NOT the greatest obstacle to real estate investment. Facts are, hardly anyone who buys real estate has the money in their personal account to pay for it. And that’s where your banker comes in. Let’s face it, do you know anyone who owns their own home? I mean really owns it? Of course you’ll know lots of people who have a property in their name they call their own. Take a look, however, into their personal finances and soon you’ll discover who really owns their property. It’s the bank, of course. Remember, your liability is your bank manager’s asset. So if these people can use the bank’s money to buy a property, then why can’t you?

I know ‘owning’ your own home may sound like the obvious way to go, but if you really want to get on the first rung of the real estate investment ladder, then this is the best way to get started in real estate investment. Why then is this first step completely overlooked by many people? Just take a look at how many are still renting instead of buying property. Now of course the relationship between rented and private housing prices varies from country to country and even from area to area. But wherever you go you will still find many people renting, simply because in their minds “they don’t have enough money to buy a house.” In reality, though, it would be much cheaper for them to buy!

When you rent, you are more or less throwing good money down the drain. Of course you have the pleasure of a home, but from the point of view of real estate investing, you are not actually building for the long term. Remember, every dollar you spend on rent is a dollar you will never see again. Whereas if you own your own home, instead of paying rent you are paying your mortgage. And even though there’s such a variance in terms of what mortgage deals are on offer across the market, the basics of mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. You might compare the interest part to rent. These dollars are gone once they’re paid, however, the part of the payment that goes to the principle is money you keep. Every dollar that is used to pay off the principal is a dollar in YOUR own pocket.

So if you’re thinking about getting started in real estate and you don’t yet ‘own’ your own home, now’s the time to take your first step towards building capital with your own real estate investment. Financially, it makes sense because the real estate investment vehicle also supplies greater opportunity for building your net worth. Simply put, when real estate prices go up, so does the value of property. Conversely, the money you owe at the bank — your mortgage — remains the same. Compare this to the financial reality of those people who continue paying rent. Their net worth remains the same. However, their landlord’s net worth is doing very nicely, thank you, and their landlord is happy for the status quo to continue. So if you would rather build your own capital, then consider buying your own home!

Many home owners accumulate more money through appreciation of their property assets than they do working a full time job. Be warned, though, this is not always the case. As you know, the price of real estate can go down as well as up. If for some reason you have to sell your home in a down market, it can be a costly venture. In fact, you wouldn’t be the first to end up with a house worth considerably less than the mortgage resting on it. So make sure you don’t overstretch yourself financially by taking on too much. In the long run real estate prices have risen, but in any cycle there are down periods. By staying within your limits and being patient, you’ll be able to sit tight through the hard times yet profit from the long term upwards trend in real estate investing.