Simply Junior

The last article ended with the business plan updated through the Operating Income line. So we’ve discussed revenue, direct expenses, and most SG&A expenses. Here we’ll finish with the calculation of net income. We’ll wrap up our business plan discussion with some overall thoughts in the next article.

The next area we need to consider are the effects of any financial activity your firm will be engaged in. Interest income and expenses need to be forecast. Part of the overall aspects of your business plan will be what financing you receive, how much of that money you will use directly, how much you will use over time, and how much that not currently being used will earn.

For instance, let’s say you received $100K in financing at the beginning of year one. You anticipate that, given your specific operations and level of business, you will use $50K by the end of year one. The average amount that you will not be using at any given time during the year is $75K, as you run it down from $100K to $50K. You will probably have that money in an interest bearing account. We can assume an interest rate, say 1%, and multiply by the average balance, $75K. The result, $750 would be our interest income for year one. You should continue your cash flow analysis and calculation through years two and three.

Of course, you may have some Interest expense as well. If you financed your business with a loan of $100K, for instance, then you would calculate the interest expense for the year. If the interest rate were 6%, then your Interest expense for the year would be $6K. Depending on your payback schedule, the interest expense could be slightly different – this assumes you are paying interest-only for the year, but this would be close in any case. You should continue this projection for years two and three.

Most small business will not be paying out dividends, but if yours will, the next line is where they would be shown.

We should deduct our net interest expense and dividends from our Operating income to give us our Net Income before Income taxes. Last but not least, we have income taxes to project. For simplicity, we’ll assume that the business is a sole proprietorship. In that case, tax rates are the same as individual rates. Your net income from your business is added to any other net income you may have through any other salary or business, and the tax owed would be calculated accordingly. In the same way, you should estimate the tax for years two and three.

Once you deduct your income tax from the previous line you will have your projected Net Income for your business. At this point you will have essentially completed the revenue, expense and income picture for your business as per your business plan. Of course, an ancillary product of this process would be year-end balance sheet figures and cash flow statements. These will show the cumulative financial results / effects and cash position, respectively.

Please see the next article in the business plan article series where we will take a step back and take a look at the big picture and the most important issues related to the business plan.

Along with your business plan, your small business marketing plans is only of the most important long-term plans you’ll make for your small business. Some small business owners choose to ignore that advice, instead preferring to fly by the seat of their pants, so to speak, to “wing it.” While some of those small business owners are successful, they’re not nearly as successful as they could be had they laid out a well-defined small business marketing plan.

Small business marketing strategy step 1: Know your market

The first step in developing a successful small business marketing strategy is to make sure that you have a really solid handle on your target market. Ask yourself: Who are my customers? Once you’ve identified who they are, ask yourself: What are my customers’ problems? What are their dreams and aspirations? The surest way to answer those questions, of course, is to ask your customers themselves. Even if you can’t afford to hire a small business marketing firm that will conduct focus group tests for you, you can do your own simple survey by hitting the streets and talking to those people you plan to sell to (and make contacts at the same time!). You’d be surprised how powerful that simple task is yet how few businesses do it.

Small business marketing strategy step 2: Know yourself

The second step in developing your small business marketing strategy is to get to know yourself (your business), once you’ve gotten to know your customers. Ask yourself: What does my business do? How is my business different than my competitors’? How does my business help solve my customers’ problems or help them achieve their dreams? Answering these questions will help you to define your unique selling proposition – those aspects that set you apart from your competitors.

That unique selling proposition should become your brand – your business’s identity. Your brand is what will pervade all of your marketing materials and what your customers will use to identify you. The importance of diligently developing your brand as part of a successful small business marketing strategy can’t be overstated.

Small business marketing strategy step 3: Analyze your competitors’ small business marketing strategies

Once you’ve developed your brand – that unique identity that tells your customers who you are and how you’re different – you can begin thinking about how you’re going to actually market your business. First, look at your competitors’ small business marketing strategies. Are there obvious gaps that you could fill (and thereby stand out among the competition)? For example, if you see that none of your competitors have websites, you could stand out with a small business marketing strategy online.

Wherever you market your business, it must be where your customers are. For example, small business marketing online will be a waste if none of your potential customers use the Internet. Likewise, you may think that writing a monthly column in your local newspaper would be a great way to advertise your services and establish yourself as an expert; but if none of your potential customers read that paper, that small business marketing strategy will fail.

At this point, your small business marketing strategy will not only be defined by where your customers are and what your competitors are doing, but it will also depend on your small business marketing budget. A full-page spread in a national magazine may be the best way to reach your target audience, but if you can’t afford to shell out tens of thousands of dollars, it’s not the small business marketing strategy for you.

Wherever your small business marketing plan takes you, the careful development of your small business marketing strategy – by knowing your market, knowing your business, and analyzing your competitors’ strategies – will be a critical determinant of your long-term business success.

When you start a business, you sit down and write a business plan (at least, you should do this). After your business is up and running, you will have to take that next step which includes marketing. Before you decide the first move of your marketing campaign, before you spend a single cent of your marketing budget, you have to write a small business marketing plan as well. And, just as the business plan spelled out all of the needs and possibilities of the new business, your small business marketing plan should also spell out the goals that you would like to accomplish.

Whether you are talking about a small business that provides a local service or a larger business that has a broader customer base, the first and most obvious goal of the marketing plan should be to increase the number of customers and the number of sales that you have. These are similar but different goals: you can increase the number of people who are coming to your front door or visiting your web site without increasing your sales by a single penny. You do need to get more people to have a look at your business, but you need them to actually open their wallets and shop once they get there.

When you are making your marketing plan, you are setting a road map for the marketing campaign and hopefully answering a number of questions that come up along the way. You might have some concerns about the cost of the marketing or may wonder what the best type of marketing is for your business. You might also wonder about where you should do the bulk of your marketing. As you answer these questions your small business marketing plan will start to take shape.

After it is written and implemented, the next step in the small business marketing plan is to decide whether it is working or not. You set the goals and the time line for those goals to determine how well the plan is working. As an example, you could say that you want to increase your sales by a set amount in three months or increase interest in your business by a certain percentage, or a combination of both.

With over 2 million real estate agents according to the National Association of Realtors (NAR), becoming a successful real estate agent takes more than just a license and a knowledge of current laws and regulations.The first year drop out range estimated to be from 40% to 80% demonstrates that many real estate agents are not as successful as they could be and research suggests that 90% give up after 3 years. The following 7 tips may help you avoid becoming one of these statistics.

First and Foremost YOU are a business. Real estate agents work for a broker, but are independent, commissioned sales people. This means that you are a small business and must run your practice as a business. Again, remember you are a small business owner. Embrace a Planning Attitude. If you don’t have a plan, then you are on some else’s plan – usually the successful real estate agent’s. During the last 10 years, what I have learned as a performance improvement consultant or coach is that most people place more value in planning a trip to the grocery store or a vacation than planning their lives either professionally or personally. Research Your Market Plan. Since you, as the real estate agent, are responsible for your own expenses, do your research specific to your marketing plan within your strategic plan. Time spent in constructing your marketing plan is definitely well spent. NOTE: Remember a business plan usually is data driven, while a strategic plan identifies who does what by when. Establish Sales Goals. Using your strategic action plan, establish sales goals. If you are new to this industry, it may take 6 months before the first sale. HINT: Use the W.H.Y. S.M.A.R.T. criteria for goal setting. Create a Financial Budget. Budgeting is critical given the up and down of this volatile market place. Your financial budget should plan for your marketing costs, any additional costs such as education and your forecasted income. Make Managing Yourself a Priority. Building a business is not easy. You must learn how to manage yourself especially in the area of time management, ongoing real estate business training coaching continuing education units, and personal life balance. Real estate is said to be a 24/7 business much like any small business. However, it is important not to lose sight of your personal life including family, friends, physical health, etc. Find a Mentor or a Real Estate Coach. Going it alone is not easy. Take the time to find a mentor who can help you steer through some of the known obstacles and help you during the “peaks and valleys.” If you have the resources, you may wish to hire a real estate coach or an executive coach who specializes in small business help and sales.

Being an incredible sales person and entering the real estate market does not guarantee similar sales success. However, these 7 tips may help you avoid many of the pitfalls by not being one of the four real estate agents who quit within one year or one of the nine who give up after 3 years.

Entrepreneurs, are you committing yourself to a New Years Resolution in 2011? If you haven’t thought of a way to improve your business life, social life, family life, or startup life, then maybe this Top 10 New Years Resolution list for entrepreneurs will help you to see the light.

10. Survey your employees.

Sometimes, the biggest employee dissatisfaction are the easiest things to fix! Know what changes your employees would like to make in their work lives and do your best to increase their quality of work life. In the long run, this can increase your employees’ productivity and therefore, help your business.

9. Converse with other entrepreneurs.

Meeting new successful entrepreneurs can give you access to mentoring and networking. By joining business networking groups, you will have the capacity to meet dozens of entrepreneurs-from aspiring to seasoned. Conversing with other entrepreneurs will help you feel a sense of community and support to build your business.

8. Stick to your manageable, reachable goals.

If you haven’t written your business plan, starting one for 2011 would be a great resolution. If you do have a business plan, be sure to stick to your goals displayed in it for 2011.

7. Take small business and entrepreneurship classes.

When you take the time to learn something new, you are adding value to your business instantaneously. Be sure to check out all of the free online courses that many websites offer. Additionally, check out any courses that entrepreneurial resources offer (for example, business incubators or organizations).

6. Make business planning a priority.

It is important to focus on your businesses’ future success throughout 2011. To actively make business planning a priority, try to plan every morning for thirty minutes or so.

5. Keep learning.

There are more ways to continue your business learning than just attending entrepreneurial classes. Stay updated on your industry and beyond by reading blogs, books, newspapers and magazine. Other great ways to expand your mind: listen to interviews, turn on an audiobook, and tune into a podcast.

4. Get a business coach.

One (almost) sure-fire way to improve your business is by hiring a business coach. Business coaches can help turn your dreams into a reality. Make sure you enlist someone that you can trust to give you objective feedback and create deadlines for your planned successes.

3. Celebrate!

If you and your team have accomplished something great, celebrate! Carve out time for celebratory lunches, cocktails, dinners and parties with your partners and employees.

2. Give back.

Giving back to a community is one of the fundamental New Years Resolutions. There are many different ways to give back to those who helped you succeed and there are thousands of organizations that would love your help. Find a cause that matters to you and devote a couple hours a month. This will help you get your business’s name out there and will help you feel good about yourself.

1. Get a life!

Managing your work-life balance is critical to a happy life. It is crucial that you take breaks from your business to enjoy life. Make a resolution to enjoy physical as well as mental vacations from your business every once in awhile. This is not only good for your health, sanity and relationships, but it is also good for business! You’ll gain relief from the stresses of growing your business, and once you return, you’ll be reinvigorated with a new perspective on your challenges and opportunities.

What are you doing to make 2011 the best year yet?

Written by Allison Way. Allison is a writer and videographer for Think Big Partners and bizperc, two of Kansas City’s newest entrepreneurial resources. Read more about this and other subjects on the Think Big Kansas City blog.