A Sample Business Plan for a Small Business May Not Be the Best Way

You can find a sample business plan for a small business in all kinds of formats. There is a sample business plan for a small business where you basically fill in the blanks or you can have access to a sample business plan for a small business where you can pattern yours from it or you can develop a business plan that is centered on what you want for your dreams and your life.

I don’t know of better way than to let your business give you what you want for your lifestyle. Whether it’s a sample business plan for a small business or one where your business gives you a plan, it should tell you what is needed to take you where you want to go and when and how you can get there and it should be in clear simple terms, supported with all the specifics.

So using a sample business plan for a small business is just one of many ways to make a business plan but frankly I think designing one that will have your business give you exactly what you want is by far the best way.

So, why not start out with what you would like to have in life for you and your family? Then develop a business plan that could show you exactly what your business would need to do to give you that life style. If you think about it, there is no other way where you have more control over what you want in life than letting your own business do it for you. If you work for someone else, you’re sure not going to have as much control over your future.

So how would you go about making a plan like this? Well if you know a fair amount about business, you can. It will take some special calculations and some work but if you know how to put together a Profit & Loss Statement, you can probably do it.

You would first do a P&L for the present year for your existing business and the first year and as many years after as you would like to have your plan cover. Your existing business financials will be the foundation for building yourself a business plan for as many years out as you want. This data will tell you a number of things but first if you want to build your plan around what you want in life, you would need to decide some things about your life:

1. You would need to decide how much income you would like to have for yourself for each of the years you plan for.
2. You would need to determine what kind of profit margin you would want from your business for each of the years.
3. And by combining these 2 things into a P&L format you can develop a financial business plan that can extend as for into the future as you would like.
4. The first thing it will show you is how much sales you would need each year to give you the income and profit you would like. Once you see the sales needed, if you know your business well enough, you should be able to estimate those additional expenses needed to overcome capacity constraints that will occur as your business grows.

With this information you can actually predict not only what your sales will be, but you can see how much your fixed and variable expenses will be, what your labor cost will be, your material cost, and your profit.

1. So let’s first look at what exactly are fixed expenses? They are exactly what they say they are; they are fixed. This simply means these are expenses that are ongoing whether you have a lot of sales or “0” sales. They are expenses like utilities, taxes, rent, salaries other than the wages used in the making of the actual product or doing a service, business fees, telephone, etc. See how these expenses would continue on even if you have 0 sales? Any expenses that fall into this category are fixed expenses. Far too many small business owners never divide their expenses into fixed and variable. As a matter of fact, if you could have a business that had “0” fixed expenses; this would be the best of all worlds, why? If you had “0” sales, you would have “0” expenses. So the closer you could get to this the better you would be.

2. Variable expenses are those expenses that track directly with sales. If sales stop they stop. These are expenses like supplies used to support in the making of your product or doing your service. Such things as shipping cost for raw materials for your product or service. If you have no sales then you’re not going to be purchasing materials so your shipping cost for those materials will stop as well. As an example, if you have a lawn mowing business and there are no lawns to mow, then you wouldn’t be buying gasoline to travel to your lawn mowing site. These kinds of things are variable expenses. If you’re producing a product, it would include supplies used to produce that product like sand paper, glue, finishing materials, cutting tools, etc.

3. Labor and material costs are also directly proportionate to sales. These are things that go directly into the making of the product or into doing the service.

a. Labor cost is the actual direct labor used in the making of product or doing the service. The cost would also include all the fringe benefits like social security, payroll taxes, vacation pay, holidays, sick pay days, etc.
b. Material costs are all the materials used in the making of product or in doing the service. In the lawn mower service as an example it would be the gasoline used in the mower and any other materials used directly in that service. For producing a product it would be all the materials used in the product that is sent to the customer including all the packaging materials.

Average Selling Price

Now when you calculate your average selling price which is your cost of sales (material + labor) divided by (1-gross profit), you can determine how many customers you would need and then come up with what you think your conversion rate would be for converting leads to customers, you can determine how many leads you would need. Then from this and with the aid of the U.S. Census Bureau and some basic research on your own you can actually have a pretty decent idea of what size your market is and is going to be in the future so you can see if it will support your business plan or not.

So if you can put this all together, you can have a complete business operating plan that would show you exactly what your business would need to do to give you the income and profit you would like to have and a rough idea whether your market would support it or not. All you would have left to do would be to figure out how to make it all happen.

It’s like planning backwards.

1. Determine what you want in life
2. Figure out what your business would need to do to give you that life.
3. Figure out how long it would take you to reach it.
4. Figure out how big of a market it would take each of the years you’re planning for.
5. Then see if that market is big enough.

Isn’t this a much better way to go about planning your business? Shouldn’t your business be designed to give you want you want instead of you working yourself to death just hoping for the best?

So how would you go about calculating all this?

There is quite a bit of calculations and you should know a little about business principles but it isn’t that complicated. So first let’s look at figuring out your future needed sales with this formula:

Projected sales = fixed expenses divided by (1-(var exp % of existing sales + mat cost % of existing sales + lab cost % of existing sales + desired net prof %))

So, let’s say you existing sales is $850,000 annually, your fixed expenses are $275,000, variable expenses is $55,000 or 6.5% of the $850,000, material cost is $236,000 or 27.8%, labor cost is $109,000 or 12.8%, and your existing profit margin is $175,000 or 20.6%.

Now let’s say next year you want to have a profit margin of 25% so what would your sales need to be to give you that profit margin? Now you might think you would simply tack on 4.4% more to sales (25% – 20.6%) and you would have it. Well not quiet. it doesn’t work that way because you are going to have the additional variable expenses, material cost, and labor cost too. Remember, the more sales the more each of these expenses and cost will be.

So here is how you would do it:

Projected sales = fixed exp ($275,000) divided by 1-(6.5% + 27.8% + 12.8% + 25% (your new profit margin) = $896,057 (new sales)

You can do this for as many years out as you want. Obviously this is based on your first year’s fixed expenses remaining constant and no consideration of depreciation, inflation, or taxes.

But most likely you would need to increase your fixed expenses because you’re going to probably have more rent, utilities, or such as your business grows. So, you would simple put in your new fixed expense number in place of the existing one for each of the years you would be planning for.

So, you see if you decided you wanted a 35% profit margin at year 5 then you could see how much sales it would take to give you that.

Now it’s also important to know how many more customers you would need as well so you should always look at that unless you have another way of growing your sales other than with new customers.

Let’s say your average selling price for your service is $925.50 and you have one transaction per year per customer.

Using that first years sales example we used above, you would calculate it this way.

$896,057 divided by $925.50 = 968 customers needed for the year. Now if your average transactions per customer are more than 1, then you would need fewer customers. As an example, let’s say your average transaction per customers per year is 2.5 then 968 divided by 2.5 = 387 customers per year.

Now let’s say you estimate your conversation rate to be 3% of turning leads into paying customers with the advertising method you’re going to use, how many leads would need to contact to get 387 customers? Simply divide 387 by 3% and you get 12,909 leads you’re going to need to contact.

Then the question is; is your market going to be big enough to provide you with 12,909 leads for the next year and how many will you need each of the following years?

It may be easier than you think to figure this out. You would do some research and with the aid of the U.S. Census Bureau you can roughly determine whether your plan can be supported by your market or not.

So what do you think? Is it better to build a business plan around what you want in life then see how your business can maybe give you that or is it better to use a sample business plan for a small business where you are probably guessing?

I’d love to help you some more. Please go to http://www.StrategicBusinessSolutionsLLC.com and see what might be available.

Should Small Business Owners Rely on Google?

Let me start by saying that Google are not out to hurt small businesses however they often do. For many small business owners the idea of being on the first page of Google for meaningful phrases within their industry is very attractive. If done properly Search Engine Optimisation (SEO) can have a massive impact on the visitors and ultimately sales or leads a small business generates through their web site.

The problem is most small business owners want to target the most generic of phrases i.e. “New Car” which has a huge amount of searches each month and so is very competitive and therefore a small business would have to invest a lot of time and money to achieve this. Often entry level SEO Companies will promise the earth when it comes to delivering phrases like this and will often give unrealistic time frames and unrealistic costs. The problem here is that it takes a small business 3-4 months sometimes to find out that these promises are unrealistic and therefore 3-4 months have been wasted not only from a cost point of view but from a lead generation / sales point of view.

There are other issues when it comes to targeting generic phrases like this in that even if a small business found a partner that could deliver these phrases in a timely fashion because they are so generic and because the search volumes are massive then the leads generated can often be very high. Just what the Doctor ordered you might think however the leads tend to be wildly different in quality from very early stage researchers, to clients ready to buy now and so unless you have the infrastructure, team and processes to qualify, filter and nurture all of these leads then many will get wasted.

So how does Google fit into this process?

There are typically three types of SEO Company:

Entry level SEO Companies who concentrate on very long tail phrases (very specific like “New Car for sale in the South of England”) which generate little if any searches and therefore little if any traffic and ultimately little if any leads / sales. These companies will typically concentrate on a little on page optimisation and very little if any link building.

Agency style optimisation companies – the agency model works very well with bigger blue chip companies who want a bespoke service have the time and money to invest on generating good quality generic phrases and have the people in house to manage and quantify the leads and enquiries. This type of model involves employing real quality SEO specialists who take a bespoke view on each client when it comes to their optimisation both online and offline. This model works well when a specialist has 5-10 accounts to work with and the company charge a lot of money for each project. This means that when Google makes changes to their algorithms they have the time and resource to make the changes necessary for each client. The problem with this model is when it is employed for small business owners because the company cannot charge a lot of money, therefore the SEO Specialist has to work on 60-100 plus clients and so even if success is achieved in the first instance when Google makes changes the SEO Specialist and company are incapable of coping and keeping up. The big problem here is that often the small business owner has come to rely on the traffic and sales from Google and if they lose these the impact can be massive.

Specialist Small Business SEO Companies – There are surprisingly very few companies who are specialists in this field and the big difference between this model and the agency model is that the companies who do this have developed world class processes and often software so that their specialists can handle multiple accounts and therefore truly keep the cost of optimisation low. The major difference here is that if Google do make changes then because of these processes and software the specialists can implement the necessary alterations to client sites instantly, seamlessly and with minimal impact to results ongoing. This type of company tend to focus on quality long tail phrases which do generate good profitable traffic however they will also have software that helps the small business owner maximise this traffic by making improvements to the whole of the online sales funnel and turn it into leads and sales.

Google are always making changes to their algorithms to prevent spammers, unscrupulous affiliate programmes and companies involved with the likes of click fraud. The problem is a lot of these companies produce small poor quality web sites to do this and so Google are always moving towards better quality, content rich, constantly updated web sites to feature high on their rankings. Unfortunately small business owner web sites tend to be more like the spammer model than they do the blue chip model and therefore often get affected by Google’s changes albeit quite innocently.

It is essential therefore if you are a small business owner that you look beyond the initial three months and the glamour and allure of the “Big Phrase” and work with a partner who can deliver long term sustainable leads and sales via your web site and can cope with the whims and moods of Google.

Internet Marketing For Small Business Tips – Choosing A Domain Name For Your Lead Generation Website

If you want to create an internet marketing for small business strategy for your local business you will need to have a website set up. This website needs to be a lead generation website in order to be effective as a marketing tool.

So what do we mean by lead generation website? To be an effective marketing tool for your local business the website that you have set up should be search engine optimized, and have the ability to capture the names and email addresses of those who visit it.

The first step towards an effective lead generation website is to choose a domain name for it. This is the name of your website and it also determines the address where it may be found on the internet. When you choose a domain name remember to include the main keywords that your target market will type into the search engines to find you.

Let’s look at an example to illustrate more clearly what I mean. We will assume you have a local business, called Anderson Plumbing Services in the town of Membury. You certainly would not want your domain name to be the name of your business because not many people would find your site this way. You want to use the keywords which a prospective customer might type into Google to find your services, and incorporate them into a domain name. So a better example for your domain name might be memburyplumbing.com.

So now that you understand that it is important to include keywords in your domain name, where can you find out what keywords people are using when they are looking for information on local business services? Fortunately there are many tools that can help you find these words. One of these is the Google Keyword Tool. If you type the phrase “Google keyword tool” into your search bar you will find it is the first result to come up.

Type into the search box some words that you think people might be searching for such as “Membury plumbing” and the tool will bring up a list of many others related to this one. You will also see some columns which tell you how many times a phrase is searched and what the competition is like for that phrase. Ideally you will want a keyword phrase that gets enough searches but for which there is not too much competition. Once you have a few domain name ideas written down you need to select a domain name registrar to see if the name you have chosen is available and register it. The domain name registrar that I use is Godaddy. Do not take any notice of all the upsells that this registrar will try and sell you. Just register the name you have chosen. It is a good idea to register your domain name for as long as you can; five years is best. The search engines are able to pick up these details and tend to take more notice of a domain name that has been registered for longer.

Now that you have a domain name that has keywords in it you will be stand a better chance at achieving an effective lead generation website as people will be able to find it more easily.

10 Most Important Factors for Small Business SEO

The online space is changing constantly and every day there is a new product, platform or idea being created to attract and distract business owners. Whilst writing this article there could be a new product being launched that renders this article out of date and so rather than look at the shiny new things available online this article will focus on the fundamentals of online success for a small business owner.

  1. Clear Project Aims – What do you want to achieve online? Are you looking for brand awareness, direct sales, lead generation or is your web site simply a supporting act for your more traditional offline activity? Setting out clearly defined goals will lead to the second key area for online activity which is keyword selection.
  2. Keyword Selection – Once you have identified your project aims you can set about the task of creating a keyword map. The aim here is to identify keywords or phrases that people who are searching, browsing or even fumbling their way online would use to find you. An example of this might be “Cheap Car Insurance” might be a phrase suitable for generating direct sales whereas “Insurance Companies” might be more brand awareness. Google’s own keyword tool is a really useful free offering for identifying good phrases with regular search volumes.
  3. Traffic – Once you have created a keyword map you need to identify the best place to generate traffic. Search engines like Google are usually the best place to start but are you looking for a Pay per Click campaign through the likes of Google Adwords? This is quick and easy to achieve but very often far too expensive for most small to medium sized businesses. Are you looking for organic traffic from the natural listings? This typically needs a good Small business SEO specialist to help but tends to deliver more quality and sustainable traffic. Could social media be more suited to your product i.e. Facebook, Twitter, Linked-in or the host of social bookmarking sites like Delicious or Digg? What about the power of video which is becoming ever more important online and traffic can be gained from the video streaming platforms like You Tube, Daily Motion or Metacafe and also direct from the first page of Google.
  4. Traffic Quality – One key factor when deciding where to get your traffic is the quality and quantity you need. There is a fine line between quality and volume – too much attention to the quality and you may not generate enough visitors to convert, too much attention to volume and you may waste lots of money generating leads that do not convert or you cannot cope with. Concentrate on your highest profit margin phrases first and build from there.
  5. Traffic Behaviour – Once you get visitors to your web site they need to stay in the first instance, get to where they need to be quickly and efficiently and once there convert into a lead or sale. If you have a high bounce rate it could be that people are searching for one thing and arriving at a page that says something different. If someone is searching for “red shoes” make sure they arrive at the page within your site that sells red shoes not a page that sells “green track suits” or your home page that talks about your business in general. If someone is searching for ‘sports wear” by all means send them to your home page or a category page that says Sports Wear. Can the user navigate the site easily without needing a crash course in code writing!! Is your site clunky or slow to load if so change it customers will get board, it is a fact that searchers are spending less time on each page they visit and bounce rates as a whole are increasing indicating that today’s searcher is less prepared to dig for what they want and are looking for it to be served to them quickly.
  6. Traffic Conversion – Once visitors are on your site and have been able to navigate or have landed on the correct page you need mechanisms to help them convert. If you have a shopping cart this is straight forward you want them to buy something however if they don’t what next? How can you grab their details so that you can market to them again? It is essential to have multiple reasons for a searcher to leave their details and often less is more here. Rather than giving away every piece of information at your disposal reduce it slightly and get the searcher to ask for it. Give them a snippet of a newsletter or white paper and get them to ask fro the rest (this way you generate a lead), show them a video and ask them do they want more? (another way to generate a lead). Early stage researchers may only want to leave an email address in order to receive a newsletter perhaps whereas a searcher who is ready to buy might leave lots of information to receive full product specifications or a price list?
  7. Traffic Retention – Most small business owners have one chance to convert traffic into leads or sales and that is usually the first time a potential customer visits the site. Many blue chips and larger web site real estate work really hard to create a web site that is appealing enough for visitors to return therefore giving them multiple opportunities to convert traffic to sales. Small business owners however usually do not have the time, resource or subject matter to create a site that engages visitors over and over again with the possible exception of e-commerce sites. This doesn’t mean that small business owners shouldn’t try by introducing videos, industry news updates, company news updates, blog posts, twitter posts, weekly offers or even competitions in order to give visitors a reason to return.
  8. Traffic Profiling – Most businesses will now have some kind of traffic analysis software (often Google Analytics) however few small businesses are conversant with all there functions. With Google analytics for example it is possible to set up targets and goals to track the performance of traffic throughout the site. Traffic profiling takes this a stage further by separating traffic and leads into predetermined categories from early stage researchers to general enquirers and the holy grail of hot leads who are ready to buy now.
  9. Lead Management – Once a lead has been captured it is essential that business owners can store and manage these leads effectively. This ranges from creating categories for leads, compiling a history, prospect system to manage calls and recalls and some kind of filtering system to facilitate target marketing and re-marketing. Even if your site is an e-commerce site it is proven that less than 5% of people who visit your site for the first time will buy something and so it is essential to have a lead management programme to facilitate the other 95%
  10. Re-Marketing – It has long been proven in the world of offline marketing that it takes between 5-7 contacts on average to turn a prospect into a top quality lead or sale and this is no different online. On average small to medium sized business owners tend to contact their prospects only 2-3 times and many only make one contact. This is one major area where a small business owner can truly maximise their ROI when it comes to online marketing by having the capacity to simply and regularly contact their prospect base.