Monthly Archives: July 2016

Great Business Ideas

For some people, buying an existing business is a better option than starting from scratch. Why? Because someone else has done much of the legwork for you, such as establishing a customer base, hiring employees and negotiating a lease. But if you want to buy a business, you’ll need to do some thorough research to make sure that what you see is what you’re going to get.

What type of business should you buy?
The kind of business you should buy depends on the types of work you’ve done in your life, classes you’ve taken or perhaps special skills you’ve developed through a hobby. It’s almost always a mistake to buy a business you know little about, no matter how good it looks. Not only will you have to struggle up a big learning curve after you buy it, but you might not know enough about the industry to determine whether a particular company is a good value.

In addition to buying a business in an industry that you know, try to choose one that you love. It’s less difficult — and a lot more fun — to succeed in business when you enjoy the work you’re doing.

Finding the right business
After you’ve decided what type of business you want to buy, you’re ready to begin your hunt for the perfect company. Consider starting your search close to home. For instance, if you’re currently employed by a small business you like, find out about the present owner’s circumstances and whether she would consider selling the company. Or, ask business associates and friends for leads on similar businesses that may be on the market; many of the best business opportunities surface by word of mouth — and are snapped up before their owners ever list them for sale.

Other avenues to explore include newspaper adverts trade associations, real estate brokers and business suppliers. Finally, there are business brokers — people who earn a commission from business owners who need help finding buyers. It’s fine to use a broker to help locate a business opportunity, but it’s foolish to rely on a broker — who doesn’t make a commission unless he makes a sale — for advice about the quality of a business or the fairness of its selling price.

Research the business’ history and finances
Before you seriously consider buying a particular business, find out as much as you can about it: thoroughly review copies of the business’ certified financial records, including cash flowstatements, balance sheets and debtors and creditors, employee files, including benefits and any employee contracts, and major contracts and leases, as well as any past lawsuits and other relevant information.

This review (lawyers call it doing “due diligence”) will tell you a lot about the company you’re buying and will alert you to any potential problems. For instance, if a major contract doesn’t allow the current owner to assign it to you without the other party’s permission, you should enlist the owner to help you obtain the other party’s consent.

Don’t be shy about asking for information about the business. Here are some other details you should determine before you commit yourself to buying a particular business:

  • who holds title to company assets
  • whether there is any potential or ongoing litigation
  • whether there have been any workers’ compensation claims or unemployment claims made by company employees
  • whether the company has consistently paid its taxes, and any potential tax liabilities
  • whether any commercial leases and major contracts can be assigned to the new owner
  • whether the company has given any warranties and guarantees to its customers
  • whether the company owns trade secrets, and how it protects them
  • whether the company owns patents and copyrights
  • whether the company holds registered trademarks
  • whether business licenses or tax registration certificates are transferable
  • whether the business is in compliance with local zoning laws
  • whether there are any toxic waste or environmental problems, and
  • if the business is a franchise, what it will take to get the necessary franchisor approval.

Lets know more about Forecasting Your Sales

Developing your sales forecast isn’t as hard as most people think. Think of your sales forecast as an educated guess. Forecasting takes good working knowledge of your business, which is much more important than advanced degrees or complex mathematics. It is much more art than science.

Whether you have business training or not, don’t think you aren’t qualified to forecast. If you can run a business, then you can forecast its sales. Most people can guess their own business’ sales better than any expert device, statistical analysis, or mathematical routine. Experience counts more than any other factor.

Break your sales down into manageable parts, and then forecast the parts. Guess your sales by line of sales, month by month, then add up the sales lines and add up the months.

The illustration gives you an example of a simple sales forecast that includes simple price and cost forecasts which are used to calculate projected sales and direct cost of sales and estimate total pound value for each category of sales.

Use text to explain the forecast and related plans and background
Although the charts and tables are great, you still need to explain them. A complete business plan should normally include some detailed text discussion of your sales forecast, sales strategy, sales programs, and related information. Ideally, you use the text, tables, and charts in your plan to provide some visual variety and ease of use. Put the tables and charts near the text covering the related topics.

In my standard business plan text outline, the discussion of sales goes into Chapter 5.0, Strategy and Implementation. You can change that to fit whichever logic and structure you use. In practical terms, you’ll probably prepare these text topics as separate items, to be gathered into the plan as it is finished.

Sales strategy
Somewhere near the sales forecast you should describe your sales strategy. Sales strategies deal with how and when to close sales prospects, how to compensate sales people, how to optimise order processing and database management, how to manoeuvre price, delivery, and conditions.

How do you sell? Do you sell through retail, wholesale, discount, mail order, phone order? Do you maintain a sales force? How are sales people trained, and how are they compensated? Don’t confuse sales strategy with your marketing strategy, which goes elsewhere. Sales should close the deals that marketing opens.

To help differentiate between marketing strategy and sales strategy, think of marketing as the broader effort of generating sales leads on a large scale, and sales as the efforts to bring those sales leads into the system as individual sales transactions. Marketing might affect image and awareness and propensity to buy, while sales involves getting the order.

Forecast details
Your business plan text should summarise and highlight the numbers you have entered in the Sales Forecast table. Make sure you discuss important assumptions in enough detail, and that you explain the background sufficiently. Try to anticipate the questions your readers will ask. Include whatever information you think will be relevant, that your readers will need.

Sales programs
Details are critical to implementation. Use this topic to list the specific information related to sales programs in your milestones table, with the specific persons responsible, deadlines, and budgets. How is this strategy to be implemented? Do you have concrete and specific plans? How will implementation be measured?

Business plans are about results, and generating results depends in part on how specific you are in the plan. For anything related to sales that is supposed to happen, include it here and list the person responsible, dates required, and budgets. All of that will make your business plan more real.