Article Summary:
An overview of a business building plan that lays out each step in creating a new business.
We live in an economy where more small businesses are forming on a daily basis than ever before in our history. Opportunity for small business has never been greater. Opportunity for wealth creation has never been greater.
The primary strategy for building wealth and creating the life style you desire is to build an asset and create sufficient cash flow so that you can purchase other assets. Building, Leading and Protecting your business is a seven step system that is implemented over time and is designed to help you create a sustainable and financially successful business. It requires your commitment, focus, and determination to follow through with each step. All steps are essential and none is any more or less important than the others.
This process is similar to spinning seven plates on seven sticks. Start with the first plate, then the second, third, and proceed until all seven are spinning. You will naturally have to return to each plate to keep it spinning. There is no end to the cycle, but unlike plates, as you fully implement each step of the wealth system you build strength and capacity that moves you forward at an ever increasing rate.
Step 1 - State Your Vision
Your vision is a picture of your preferred future state and forms the foundation for your commitment to your business. It identifies the reasons your company exists and what you and your company aim to accomplish. Your vision is comprised of four parts:
1. Purpose statement.
2. Mission statement.
3. Descriptive Narrative of the company.
4. Values to which the company aspires.
The Purpose
The purpose defines the intentions and aspirations of your business. It is a clear statement to yourself, your employees, and others why your company exists. For example, Nike has a stated purpose "To experience the emotion of competition, winning and crushing competitors." The purpose for my Wealth Diva program is to "Create more women millionaires than any other entity.
The Mission
The mission describes your company's goals, activities and strategic actions that will help to fulfill your purpose. The most effective mission statements are those which are both audacious and attainable.
Descriptive Narrative
The descriptive narrative describes why your business exists, what it represents, what it does, who it serves and how it serves them, and the experience you create for employees and customers.
Values
Your values are one word or sentence declarations of who you are and what you stand for.
Step 2 - Identify Business Strategies and Tactics
Once you know where you are going, you need to know how you're going to get there. These are your business strategies and tactics. Your strategies are the revenue-producing activities that serve your purpose, accomplish your mission, and adhere to your values. Your tactics are the specific tools, techniques, and actions used to accomplish each strategy.
For example, if your Vision is to acquire $5 million in Real Estate, one strategy may be to obtain investment funding. Tactics for that strategy might involve developing education packets, joint venture agreements, and communication processes with investors.
The keys to developing successful strategies and tactics are:
- Allow for up front energy to initiate a strategy
- Careful measurement of success and failure
- Develop systems (accounting, marketing) to support the tactics
- Create long and short term action plans to implement tactics
- Follow through and complete actions, delegating when appropriate
- Have a feedback loop for continuous correction and improvement of strategies
Step 3 - Create a Revenue Model
Revenue drives your business. All your strategies must be tied to your revenue model. This is what distinguishes a business from a hobby. You either make a profit, or you lose your business.
Revenue modeling has two components:
- Financial Baseline
Your financial baseline is a snapshot of your current financial status. It consists of a monthly Profit and Loss (P&L) statement that outlines all income and expenses for your company, and a Balance Sheet that identifies all assets and liabilities held by your company. - Forecasting Projected Revenue
The first step in forecasting is to look backwards. Identify where and how your revenue is currently generated; then, create a projection based on past and current trends and your plans for growth. You can find revenue modeling forms at www.liveoutloud.com/forms. I encourage you to do revenue modeling on a monthly basis, as your baseline will change and your projected revenue directly impacts your marketing, sales, and product development teams.
Step 4 - Protect Your Business Assets
Financial, tax, and legal protection of your business and its assets is accomplished through entity structuring. The goal of proper asset protection is to minimize your risk and to grow and sustain your asset base. The main types of entities your business can have include:
- C-Corporation: a legal entity entirely separate from the people who own the corporation. It offers over 300 deductible expenses and options for the fiscal year end date.
- S-Corporation: income is passed through to the shareholders of the corporation. It allows approximately 75 deductible expenses.
- Limited Partnership: has one or more General Partners and one or more Limited Partners. Limited Partners share in profits, but are shielded from liabilities. General Partners have unlimited financial and legal responsibilities. Ideally, the General Partner is a C or S Corporation.
- Limited Liability Company (LLC): a separate entity for asset protection purposes. If sued, only the assets of the LLC (not the people) are at risk.
- Trusts: removes property from the reach of creditors and unwelcome beneficiaries.
Your goal should be to work with a tax strategist or CPA to maximize your tax deductions while limiting your personal liability.
Step 5 - Market Your Business
Marketing is critical, and for many entrepreneurs it is the last thing they want to be doing. It is done randomly, irregularly, or not at all. To be effective, marketing needs to be a system that is highly focused on a very specific market identified by your vision.
Marketing begins with a clear description of your target market and what you do for them. The condensed version of this is what we call your "elevator speech" because it can be stated and understood within a few seconds. The most powerful statements are often the shortest, such as "I help small businesses who are struggling to find new clients."
When you outlined your business strategies, you most likely identified a number of marketing strategies as well. Further clarification of your marketing strategies is vital to your success. How will you reach your target market and convince them to do business with you? Options range from direct mail and telemarketing to Opt-in newsletters and a dynamic web site. You can create videos, ad campaigns, or speak on the radio or TV. Referrals often generate more high-end business at a significantly reduced cost and are ideally an integral part of your marketing plan.
Each marketing strategy, like your business strategies, consists of a number of tactics and action steps. Do you have a web site? What tactics will you use to ensure it helps sell your products and services. Be methodical and systematic about how you implement your marketing strategies.
Step 6 - Sales
You can bring prospects to your door with great marketing, but can you sell them your product or service? Sales is both a strategy and a tactic that requires an allocation of resources, energy and time. While there are many models and theories for selling, we've adopted the simple model of "Ask, Tell, Ask".
First, ask open ended "what" and "how" questions that help you understand what they want, what they need, and the key emotional urgency they face that drew them to you. Listen to their language to determine their urgency and level of decisiveness.
Then, tell them what you've heard in a way that shows respect for their situation and creates trust in your ability to provide assistance, offering one or two suggestions if appropriate.
Third, ask closed questions for the intent purpose of creating a sale. Your goal is to have them answer as many questions with "yes" as possible, leading them to the inevitable conclusion that they need you.
Step 7 - Leadership
You are the leader of your business and it is your job to inspire and motivate your team as you help them maintain daily focus on your vision. Whether your team consists of just you or several hundred, you must see the future while designing and orchestrating what happens today.
As a leader you will demonstrate character, capacity, credibility, courage and clear communication. Through these traits and skills, you want to lead yourself and your team by asking powerful questions, such as "How will you accomplish that?", and look for solutions instead of problems. You develop a strong team of competent individuals and stay six to twelve months ahead of them while helping them put into place now the strategies needed to achieve your goals. You lead, you succeed.
Loral Langemeier, founder of Live Out Loud, is known as the millionaire maker. A team made multi-millionaire by age 35 she actively invests in business, the market, multiple real estate ventures and more. Through her diverse experience, she developed the concept of a Financial Wealth Cycle which is the core of her coaching programs. President of several companies, Loral is a nationally known speaker, coach and author of the book, Guerrilla Wealth, part of the best selling Jay Conrad Levinson Guerrilla Marketing series. For more information, visit www.liveoutloud.com
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