All posts by Dan Boudreau

Dan Boudreau has devoted the last 20 years to coaching and mentoring regular folks into the captivating world of business. He authors and facilitates lively, transformative workshops on the topics of entrepreneurship, business planning, and training for trainers. He has inspired thousands of entrepreneurs to become successful business owners and leaders. Launching into his first venture in 1980 with barely enough knowledge to fill the back of a beer cap, he has embraced (and survived) the wide spectrum of business ownership, from single owner home-based enterprises to ventures employing more than 300 workers. Dan's top mission essentials are: laughing, loving, and learning. Armed with the business planning process as a teaching tool, Dan empowers ordinary women and men to create the financial stability and lifestyle they dream of. He is most proud of being acknowledged and appreciated by peers and friends for his ability to bring entrepreneurial ideas to fruition with a nod towards his warm, engaging personable style. In 2006, Dan compiled his knowledge (and bruises) into his first book, Business Plan or BUST! In writing this book, he combined his practical experience as a business owner with his expertise as a lender for an economic development agency, and tossed in his unique brand of wit. The end result: A refreshing perspective and practical style that makes the time-worn topic of business planning easy, fast and fun! When Dan takes those occasional days off from navigating the business world you might find him stuffed into a floating toothpaste tube sometimes referred to as a kayak (rarely right side up), or perhaps coaxing disturbing sounds from his guitar. His ultimate relaxation always involves fresh air, clean water and beaches—from botched attempts to outsmart fish in the rivers of northern British Columbia to flopping around in the waves or practicing applied inertia on just about any tropical sandy beach…

Twelve Tips For Business Planners

Pencil_Tips1. Tidy up your personal finances before applying for a business loan.

Pay down loans, clean up any bad debts, collect some business-related equipment and save some money.

2. Bring some equity to the table.

Save money, sell some toys, borrow some love money, create something for your business, or get a second or third job for a while.

3. Prove your business case to yourself and to those who will read your business plan.

Persist in your market research efforts until you become ‘the expert’ for your business. Talk to people, ask questions, search the Internet, take courses, read books, listen to tapes, and subscribe to trade publications. You will feel more confident and have an easier time convincing your readers that you know what you are doing.

4. Listen and learn.

Listen to those who agree with you AND to those who do not. Listen to all who shoot holes in your business idea, they might just be pointing you toward success. When you think you’ve heard it all, listen harder!

5. Be honest… and thorough… and accurate.

Missing information or inaccuracies definitely invite questions and send the wrong message. Putting in wrong information or conveniently leaving out some of the less obvious, non-flattering financial information (like unpaid long overdue taxes) is a sure way to turn off potential investors.

6. Answer the basic business questions.

Who? What? Where? Why? When? How? A proper business planning system will provide you with a framework in which to place the confusing array of information you will gather. Choose a system and use it.

7. Provide a professional presentation.

There is no reason in these times, for a poor presentation. Use a proper business planning system, ask a friend, or pay someone to proof. Get someone to keypunch the plan if you need to, but do a professional job on it. Demonstrating that you care will increase the odds that a lender might care also.

8. Keep your language clear, simple and to the point.

If you must use technical jargon, provide an explanation of potentially confusing terms.

9. Write in the third person.

It is important to separate your business from yourself and to think and write about it as a separate entity.

10. Use charts, graphs, pictures and bulleted lists where appropriate.

Make sure your numbers match what is being stated in the narrative part of your plan. Keep the business plan brief, 20 pages or fewer, but be sure to make pertinent information available in the Appendices.

11. Be realistic in your expectations.

No matter how lofty your financial aspirations might be, know that businesses are rarely profitable in the first few months or even years. Estimate your sales conservatively and your expenses a bit higher than you think they will be. Keep that cash flow realistic and be sure to include ALL expenses and some contingency money.

12. Get into a business about which you know something, preferably a LOT…

Does Your Business Plan Prove Your Business Case?

soldA little diligence in planning can save time, money and energy as your business grows. Unfortunately, some people back away from business planning because it appears to be a lot of work. Although it can be a demanding task, it doesn’t have to be overwhelming, and the benefits can be remarkable.

In order to be of maximum value, a business plan must prove supply, demand and the financial case.

  1. Demand. Each business has a sweet spot, a certain number of customers to keep the doors open, often referred to as the break-even point. Signed contracts can be the kiss of life for some types of business. Where contracts are not possible, surveying potential customers can help to validate demand. Friends and family promising to buy your stuff forever may be a wonderful indication that people love you, but in no way should their flattering claims be interpreted as a reliable indication of demand. The purest proof of demand is sales of products or services. Regardless of the method used, an entrepreneur must be convinced that demand exists before starting a business.
  2. Supply. Once satisfied there is a demand for products, an entreprenuer will want to confirm ongoing access to the materials and talents that enable the business to serve its customers. A product producing business, such as a furniture manufacturer, needs a reliable supply of wood. A housecleaning service must be able to find and hire suitable workers. Most businesses need a combination of materials and skills. Restaurants, for example, will need a steady supply of food products, a rollicking good chef, and a team of cheerful servers to keep customers satisfied on the front end.
  3. Financial Case. Profit is probably the best measure for proving a financial case. For example, a planner will need to validate the supply costs, determine how much customer’s will pay, and project the quantities of products and services to be sold. Miscalculating any of these items can erode the forecast’s reliability. When building a financial case it’s important to forecast sales a little lower than anticipated and estimate expenses a bit higher than expected. Diligence in confirming financial items builds a reliable profit projection.

Those faced with creating a business plan usually wonder how many pages the plan should be. Paper weight isn’t much of an indication of the value of a business plan. The business information might be summarized for some audiences in a couple of pages, while a business analyst will need more detail and scads of supporting information in order to evaluate a loan request. The same amount of background research is necessary even though the plan’s thickness will vary according to the needs of the reader or audience.

The true value of a business plan arises from what it teaches the owner about her business, and the usefulness is gained from the benchmarks it provides for owners working forward. Businesses really flourish because of the actions the owner takes once the plan is done.

Smart Entrepreneurs Cruise with Business Plans

smart_entrepreneursA quick search of the Internet will get you a mess of articles extolling the pros and cons of business planning. The advocates claim that anyone getting into business must have a business plan. On the other side of the argument are those who think business planning is a waste of time, including a few seasoned owners who matter-of-factly claim they’ve never had a business plan.

This can be confusing for those new to business. It’s hard to know what to believe, and naturally nobody wants to waste precious time if a business plan is not needed, nor should they—unless there are tangible benefits.
Let’s kill a myth. Most of those who will tell you they have no business plan, when questioned further, will admit that they actually do have a plan; it’s just that they don’t think of it- or refer to it as a formal business plan. Make no mistake about it; where there’s a thriving, sustainable business, there is a plan.

Many who started without written business plans did so back when it was possible to travel the railways with manually powered scooters. Trains were much slower then, and a hardy lad could almost always yank the scooter off the tracks before being crushed by an oncoming train. Nobody worried too much about having a train schedule; you could wing it and live to tell about it. Since then, railways and the world of business have gotten more complex. Nowadays, rail workers wouldn’t dream of travelling the rails without a lineup or traffic schedule, nor should entrepreneurs take unnecessary risks in today’s business climate.

Entrepreneurs who take the time to develop business plans will enjoy the following benefits.

  1. You’ll know whether your business stands to profit or lose money.
  2. You’ll understand the flow of cash in and out of your bank account and if or when you might need to borrow money.
  3. You’ll be able to identify significant risks and figure out how to avoid them.
  4. You’ll have a marketing strategy for getting your goods into the hands of customers.
  5. You’ll use market intelligence to develop realistic sales projections.
  6. You’ll get a clear picture of your business expenses.
  7. You’ll know whether the business will meet your personal needs and whether it is a wise investment of your time, energy and money.

In the complex marketplace of today, some sort of planning process must precede a business start-up or expansion. Smart pilots don’t fly without maps; savvy entrepreneurs don’t cruise without roadmaps. Marketplace graveyards are littered with the bankruptcies of those who were fooled into thinking they didn’t need a business plan.

If you’re starting or growing a business, do you really need a business plan? If you’re risking any more than chump change, yes. If you can afford to lose the investment, lottery tickets are a more efficient way to part with your money than failing a business. When putting serious money on the line, a success bound entrepreneur will always be stronger when armed with business plan.

Deadly Overhead Costs to Consider When Setting Your Prices

deadly_overhead-001Are your prices high enough to keep you in business?

If you’re self-employed and providing services at prices anywhere near the rates you earned as an employee, you might be missing some of the deadliest hidden costs.

The obvious overhead costs include things such as rent, utilities, advertising, insurance, and office supplies; business expenses not directly related to the production of goods or services. However, there are a few costs that aren’t visible until after your venture is in play. They are easy to overlook, difficult to measure, and they’re seldom factored into the start-up financial projections.

Here are a few expenses to consider when setting your prices.

1. Audits, Fines, Penalties. Taxation and worker safety organizations can call for an audit just about any time. They can also cheerfully penalize you if you happen to be late with your remittances.

2. Downtime. As an employer, you are responsible to provide workers with everything they need to be organized, efficient and productive. Any losses or downtime come right out of your profit.

3. Political, Bureaucratic or Regulatory Changes. As a business owner, you will invest a certain amount in keeping up with changes, and then you will expend money, time and energy to adapt to those changes.

4. Disputes, Legal Battles, Allegations. Even if you choose your battles wisely, and even if you take the high road, all skirmishes will take a bite out of your overhead budget.

5. Unplanned Professional Development. Just about the time you get comfortable with a software application, somebody with move your cheese and you’ll find yourself propelled into a fresh new learning adventure. The time spent with your lawyer and accountant is necessary and valuable, and must be factored into your overhead calculations.

6. Theft of Goods, Inventory, Time. Employees might sneak the odd free meal from your restaurant or some self-serving soul might help themselves to a truckload of your products. You pay, either as a result of the losses or higher insurance premiums.

7. Non-Payment for Goods or Services. If you’re in an industry that expects you to accept payment after delivery of goods or services, you run the risk of non-payment. When that happens, you must decide whether to fight (court, collections agencies) or let it go (your loss). Either way, you pay.

8. Economic Changes and Natural Disasters. Finally, if there are any funds left in your overhead budget after all of the other possible challenges, you may be hit with any of a host of external complications. Who is ever prepared for a hurricane, a fire or a flood?

Business owners will recognize the hidden costs already mentioned, and can probably add a few of their own to the list. Optimistic newbies tend to hope these awful things won’t happen to them, but no business owner goes unscathed. Relentless low pricing will keep you broke and drive your business into the dirt.

The key to surviving in business is keeping your prices high enough to withstand any unpleasant surprises, while staying competitive enough to keep making sales.