Five Steps to a Rock Solid Business Foundation for Solo Entrepreneurs

“An accurate plan poorly implemented is more successful and effective than a vague or generic plan implemented with brilliant precision.” – Author unknown.

Just about everyone in the business world agrees that planning is important and has some value. Before you can decide on an approach to planning, however, it’s important to think about who is asking you for your plan and what purpose it will serve.

For example:

If a loan officer at the bank asks to see your plan, he is primarily interested in reviewing your financial projections to make sure you can repay your debt.

If a venture capitalist asks to see your plan, she is primarily interested in discerning the return on her investment in your business idea.

If an employee asks you about your plan, he is seeking clear direction so he can successfully contribute on the job and earn his salary.

As a solo entrepreneur, you are looking to focus your efforts on ensuring the success of your business and optimizing the use of your time. We want to focus on doing the 20% that makes 80% of the difference.

A common mistake people make in business is that they take action without getting clear and accurate direction on a few key things before they start. To solve this problem, I suggest that people start with a written Situation Analysis.

The Situation Analysis is simple to do if you break it down into sequential steps. Writing clarifies the logic. If you try to do it all in your head, think about it all at once, or attack the steps in the wrong sequence, the clarity and accuracy you seek with the exercise is much more difficult to achieve.

5 Steps to a Clear and Accurate Business Foundation

Clarity is determining who your customers really are and if they really need your services.

Accuracy is not misleading yourself with opinions and interpretations, but rather dealing with the facts related to the opportunity.

There are multiple aspects of your situation to consider, but the five primary considerations are your customer, your offer, your business development strategy, pricing and industry trends.

1. Your Customer

Have you clearly identified your customer?

What are the customer’s needs, wants, and desires?

Are you clear about the problems you can help them solve?

How many people have these problems (i.e., what’s the size of the market)?

What things does the customer want to accomplish?

Who is the decision maker within the customer’s organization?

Who are the key decision influencers?

What is the decision-making process the customer will use to say “yes” or “no” to your offer?

Use data and facts throughout your analysis whenever possible, not speculation or hope-fors. The information you need can often be obtained with conversations with potential customers and market surveys. You will want to ask: “How often do you have this problem? How important is it to you to solve this problem? How would you personally benefit if the problem were solved?” Some of the core benefits to the customer may include achieving their goals, increasing revenue, increasing productivity, saving time, and increasing security.

2. Your Offer

After you have clarity about the customer, the next step is to be clear about the programs, services, and products you will offer. If you are clear about the customer’s problems, it will be easier to get clear about what you will need to offer to satisfy those problems. Put your offers in ranked order of opportunity and focus your efforts in the highest leverage areas.

3. Your Business Development Strategy

My experience is that solo entrepreneurs tend to waste a lot of time working on their marketing materials prematurely. An effective business development strategy is best developed after you’re clear about your customers and the problems you will solve. What are the materials and tactics needed to effectively communicate your offering to potential customers? Possibilities include an executive summary, sales sheet, business cards, face-to-face networking, public speaking, and perhaps an active blog and social media presence.

4. Pricing

What value are you bringing to solving the problem for your customer? What does the competition charge for a similar offering? An effective pricing strategy will take both of these factors into consideration.

5. Industry trends

My observation is that the trends in the industry, if not monitored correctly, can act like a brick through the front window. What are the trends in your industry and that of your customer? Are you able to step into a trend that is going to create an opportunity or are you stepping into a trend of a diminishing market? Examples of industry trends include innovation, government intervention, and the economic climate.

Learn more about performing your own Situation Analysis on my sister website, Stepping Through the Gate by downloading my 4 step planning process.

Now it’s your turn.

Are you being crystal clear about a specific customer you are targeting and the set of problems you are trying to solve or are you trying to be all things to all people?

Are you clear about the problems you solve or the conditions you eliminate with your services, programs, and products?

When you can answer “yes” to these 2 questions, your life will be easier and your efforts to develop your new business will be more productive.

Building a Bullet Proof Business Foundation Online

Developing a strong online business foundation is the difference between long term marketing success or constantly ‘hustling’ to simply make a few sales! The core of any successful business starts with your online reputation and if it is not favorable it will make all your efforts much more difficult! So how do you develop and maintain the online reputation you need to enjoy the marketing success you seek on the internet? Here are 3 quick suggestions!

Be a Resource

Circulating content along with blogging is a great way to serve up plenty of useful and free information to readers! By making this an ongoing part of your normal business activities you will be able to increase both your exposure and credibility! The more credible you are the more your online reputation will grow as an asset that serves to increase your marketing success! Always keep in mind in order to ‘receive’ you must first demonstrate the willingness to ‘give’ in a way that benefits others!

Do Not Be an Annoyance

The use of pop ups, opt ins or continually promoting will only serve to diminish your ‘value’ in the eyes of others! Always ‘asking’ and never ‘giving’ is one sure way to get yourself ignored! In order to have a successful business you must develop a relationship with your target audience in which they will be more receptive to any messages you send out! If people feel they are being continually ‘hammered’ with promotional offerings and little else, they will eventually just tune you out completely!

Brag Less Produce More

Shameless self-promoting will get you labeled as a braggart. Try instead to ‘fly under the radar’ by consistently creating and/or representing quality and without the hype! Exercising a little humility as a general rule never hurts in terms of the way people may perceive you! Developing an online reputation like this makes others more inclined to listen to what you have to say helping you build a large following! When you do decide to make product offers others will tend to be more receptive which is what you want and need to have a successful business online!

Building a strong business foundation takes time since it involves establishing a credible online reputation! People must be made to feel comfortable with you if you have any hopes of building a successful business on the internet. The 3 suggestions discussed above aim to project a generous, humble and helpful image people are more incline to trust! As this reputation grows and expands online it will only serve to position you for long term marketing success! The customer loyalty you are able to establish will lead to an ever increasing rate of repeat sales and a flood of referrals as well!

Laying Your Business Foundation, Part 2: Business Formation

In this series we will take about business formation. If you have not read Part One, stop what you are doing and read the article now.

Again, laying your business foundation requires the same intensity as building a bridge, school, museum or any beautiful structure. It takes planning, time and execution, which means doing whatever, needs to be doing to complete the project.

I cannot tell you which business formation is best for your business, only you can make those types of decision. Your attorney, spouse, children or friends cannot shape your reality for you, it’s personal. Before making a decision or selecting which business formations consult with a licensed attorney and accountant to advise you of your legal rights.

Let’s begin…

Sole Proprietorship (SP)

The term “sole proprietorship” means that the business is the same as its owner. The assets and liabilities of the business are one and the same as the owner. There is no mandatory filing requirement on the state level; however, a sole proprietor may register a trade name. Although I do not recommend this entity; however the choice is yours.

Advantages

No other documents needed to open a bank account; purchase materials or supplies needed for the business and you can file taxes under your name. There are other reasons but these are the main reasons for doing so.

Disadvantages

You are responsible for any lawsuits against your company; therefore, this will affect your family well-being. Lenders do not see your business entity as a mom and pop business without any growth. Vendors are less likely to extend credit for major purchases. Contractors, governmental agencies prefer to utilize the services of a company that is not a sole proprietorship.

Incorporated (Inc)

A corporation is a type of legal entity, often formed to conduct business. A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. The incorporated entity can be very complex; however, you can delegate these complexities to someone who is skilled with incorporation such as an attorney or accountant who are knowledgeable about business laws and taxation.

Advantages

Your business will be accepted as a major contender within the business arenas. You and your businesses are separate entities which mean if your company is ever sued or liable the plaintiff can only charge the company not you personally. Lenders are more apt to lend funds to an established corporation entity compared to other business structures. You are telling the world that you are serious about expanding, growing and or selling your business. There are a number of good advantages to this particular entity and the decision is entirely up to you.

Disadvantages

The number one disadvantage is double taxation. You or your account will have to file taxes in the company name and your name. This drives most potential companies to sway from incorporating under this business entity. Contact your attorney and account to help you navigate through the incorporation process.

Limited Liability Corporation (LLC)

A form of business whose owners enjoy limited liability, but is not a corporation. The State of Wyoming is known as the LLC formation capital since 1976.

Note: Wyoming is not the only state that welcomes LLC formations.

Advantages

LLC members are afforded limited liability and have pass-through taxes similar to a partnership. By forming LLC instead of a corporation, you get all the benefits of forming a corporation but you avoid a few drawbacks that you would run into if you formed a corporation. Specifically, when you form a corporation, you subject yourself to double taxation and excessive paperwork. Both of those annoyances can be avoided if you form LLC. The LLC allows for multiple owners, or members. Additionally, there is a managing member, who also enjoys the benefits of limited liability and is typically the person responsible for managing the business. Members of LLC can be other companies, trusts, organizations or individuals. Members share power, ownership and responsibility over the LLC operations based upon an agreement each member signs upon formation of the company.

Note: If you are the only LLC member or manager you are allowed to use the 1040 or 1040-A filing forms. Check with your accountant or tax provider for advice.

Disadvantages

The entity we were forming will be seeking outside investment and will be offering stock options to employees. Many angel investors and venture capital firms are not lenient about investing in LLC because it’s a new business formation that is not well understood. When raising capital, it helps to keep things simple and avoid anything that makes an investor think twice.

Limited Liability Partnership (LLP)

A partnership where a partner’s liability for the debts of the partnership is limited except in the case of liability for acts of professional negligence or malpractice. In some states LLP may only be formed for purposes of practicing a licensed profession, typically attorneys, accountants and architects. This is often the only form of limited partnership allowed for law firms (as opposed to general partnerships).

Advantages

Both LLC and LLP entities are treated as pass-through entities for federal tax purposes. This means that the owners report company profits and losses on their personal income tax forms. The business itself is not subject to a federal income tax, as a corporation.

Disadvantages

LLP offer the same type of limited liability that of LLC; however, some states require a minimum of one partner of LLP liable for the obligations of the company. There are other business formations; however, these are the most popular.

Until Next Time! Stay tuned to “Laying Your Business Foundation.”

The overall scope for choosing a business formation is to give your business an identity that is separate your personal identity. Doing so will level the placing field within the business community should you choose to grow or expand your business. The topic of discussion for the next article of “Laying Your Business Foundation – Part 3”: Customer Service.

Build a Sound Business Foundation

Sometimes people will start an internet business that has no business background at all. This is a big reason for the high failure rate of new internet entrepreneurships. If you do not have an education in business, then you would be very wise indeed to speak with those who are well versed in business.

An internet business of any kind is a BUSINESS. It must be run like a business and it must be build upon sound business practices. The only ‘dumb’ questions are those that are never asked. You need information and the best way there is to get the information that you need is to simply ask questions of those who have the answers.

There are courses available both out in the brick and mortar world as well as on the internet about how to set up and run a successful business. You can’t abide by the rules if you don’t know what the rules are. Do your homework before you launch your business.

You need to lay a rock solid foundation so that your new business doesn’t become one of the casualties that are caused by poor planning or even no planning. You need a business plan. You need a business model and it needs to be one that you can understand and follow. Jumping in and hoping for the best isn’t a plan. That will only insure that your new internet business will not still be in existence four months from now.

Take your time, choose the right business, and people to work with wisely!

I had to learn this the hard way but you don’t have to.

Thanks
Lenny