Rolfe Larson – Page 12 – Management Library

August 20, 2010February 21, 2022

Plan Your Work, Then Work Your Plan

Every business should do at least SOME business planning before starting or expanding operations. Whether that’s the two page version with targets, the five page variant with some analysis (more on that next week), or the 37 page detailed masterpiece, every business needs to do some of this.

There are two basic steps to business planning.

First, Plan Your Work

Business planning is simply a technique for figuring out where you want to go and how you’re going to get there. Mostly a business plan is done to plan your work, including strategies to overcome those inevitable bumps in the road. Business planning doesn’t have to be complicated; it just needs to answer those questions that need to be answered before you start the business, with educated guesses on all the rest.

Then, Work Your Plan

But here’s the thing. Creating a plan is not enough. You need to implement it. I know that sounds painfully obvious, but the truth of the matter is that many business plans are put away after they’re written and never looked at again. And that’s not because they’re not relevant any more, but because many people do not follow the second essential step of business planning: Work Your Plan. As you review results and decide on your monthly or weekly priorities, refer back to your plan. You did some good thinking back then, and even if it’s no longer completely true, much of it still is. Take the time to figure out what is needed to carry out the strategies and achieve the results presented in that plan. Sure, make adjustments, but don’t start from scratch. You have a plan: work it.

At some point, you’ll need to revise the plan, but in the meantime, stick with it as much as possible. Until you change it, working your plan is the best way to get to where you want to go.

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For more resources, see our Library topic Business Planning.

August 3, 2010March 28, 2023

Social Enterprise: A Portrait of the Field

This recent report summarizes a recent survey of 740 organizations on the current state of the SE field in the US. This work was prepared by the Social Enterprise Alliance, in partnership with Community Wealth Ventures and Duke University’s Center for the Advancement of Social Entrepreneurship. REDF funded the survey.

Some interesting findings include:

Top five SEs: education/training, retail/thrift stores, consulting services, food services/catering, arts ventures.
Top five mission areas: workforce development, housing, community economic development, education, health.
87% of respondents currently operating an SE anticipate launching another one within three years.
60% operate their SEs as a division of a larger organization, with smaller percentages utilizing a for-profit (15%) or nonprofit subsidiary (8%), or a joint venture (5%).
One third of the 400 respondents currently operating an SE had SE revenues above $1 million.
Larger organizations generate more SE revenue, both in terms of dollars and percentages. For example, 42% of respondents with operating budgets greater than $10 million reported SE revenue of $5 million or more. In contrast, 43% with operating budgets below $1 million reported SE revenue of less than $100,000.
Not surprisingly, 80% of SEs lack sufficient growth capital. More surprising: for SEs launched since 2000, individual donations were the second most cited capital source, after foundation grants. Less than 9% of the SEs mentioned debt or equity financing as a major source of start-up funds.
Finally, in terms of biggest challenges, 27% mentioned sales and marketing, 23% financial issues, 14% human resources, and 12% operations.

All in all, this report provides some useful baseline measurements, along with six informative SE case studies worth reading. We hope efforts will be made to update this data regularly. Among things to watch: Will the new L3C and B-Corp organizational structures gain traction among SEs? Will equity and debt financing become more common for SEs as social capital markets expand?

Stay tuned!

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Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010. Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own. Read my weekly blogs on Social Enterprise and Business Planning.

July 16, 2010February 22, 2022

Case Against Business Planning

One of the hallmarks of good business planning is being open to disconfirming information. Now let’s apply that principle to the decision on whether to do business planning itself. We think it’s a good idea, but maybe we’re wrong. Maybe it’s OK to do what most business owners do all the time: just wing it, and then make adjustments as you go.

So what are the arguments against business plans?

First, let’s be honest, they’re works of fiction, predicting a future that refuses to cooperate. Admit that you have very little idea what your business will look like in a few years. Move on to the next thing on your to-do list.

Secondly, a comprehensive plan won’t help you raise money. Investors won’t read it. A few pages, sure, if you’re lucky. If you have any chance of getting startup funding – and very, very few businesses do – then it’s the strength of your idea, relationships, and track record that will wow them. Not 37 pages of dense text and hockey stick projections.

Finally, stuff happens, and success will depend on how you respond, not what you’ve written down. Business plans don’t succeed; people do.

So should you go through a business planning process? I think the answer is still yes. It forces your management team to get clarity and agreement on purpose, approach, priorities, and information gaps. That’s useful even if most of its assumptions prove to be incorrect. Even if it doesn’t help you raise any money. In contrast, the wing it model is a bit like heading on a trip without a destination, let alone directions. A good business plan provides you with a decent map with a big X on it. That will help focus your efforts on what you need to do to get there. And how you will adapt when you hit those inevitable obstacles. Do “just enough” planning to serve your purpose, but don’t skip it entirely.

Find your X on the map and head there.

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For more resources, see our Library topic Business Planning.

July 14, 2010March 28, 2023

Book Review: Succeeding at Social Enterprise

Someone reading a book review in the paper

Earlier this year, the Social Enterprise Alliance published Succeeding at Social Enterprise: Hard-Won Lessons for Nonprofits and Social Entrepreneurs (Jossey-Bass). Anyone interested in starting or strengthening a social enterprise would benefit from reading this informative book.

The book’s sixteen chapters are organized into three sections: Startup and Structure, Methods, and Leadership. Each section contains chapters written by leading social entrepreneurs, offering “hard-won” lessons from the field. This book provides a sampling of bite sized morsels on many topics, with tips, anecdotes and a few war stories along the way. Regardless of your level of prior experience in social enterprise, you will gain useful insights from reading this book. I certainly did.

People often ask us for social enterprise examples, case studies or success stories, along with lessons from those experiences that they might apply to their won work. This book delivers on those requests, and it does that very well. What it doesn’t provide is much in the way of in-depth “how to” information on starting a social enterprise, despite claims to be all about implementation. So, for example, there’s very little about market research and even less about competitor analysis, both essential ingredients for success in starting and sustaining a social enterprise. Instead, there’s a great deal about values, mission, stakeholders, social impact, even advocacy – each of which is important to many social enterprises but not always all that important to customers.

But that’s a relatively minor critique of this informative book. Taken for what it is – lessons learned through stories and structures – Succeeding at Social Enterprise is well worth buying, reading and keeping for future reference. It’s a book you’ll come back to so many times you’ll appreciate the index that’s been thoughtfully included at the end.

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Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
Read my weekly blogs on Social Enterprise and Business Planning

July 7, 2010February 22, 2022

Make a Business Plan and Reduce Chances of Incurring Debt

Guest post from Ryan of Debt Consolidation Care Community

It is imperative to make an effective business plan when you start a business. A good business plan helps to reduce your chances of incurring business debt. Lots of people don’t give much thought about creating a good business plan and make costly mistakes. They incur business debt and are compelled to opt for various debt reduction programs.

Tips for creating a business plan

Here are some tips that can help you in making an effective business plan:

Know about your business: Before starting a business, roll up your sleeves and gather knowledge about the various aspects of your business. Know about the products, study about market segments, and understand the nature of competition in the industry. This will help you in creating a good business plan. Chalk out your business priorities and goals and accordingly make a business plan.

Research the market thoroughly: As a business owner, you should make extensive research on the market and make sure that the business plan includes reference to the market size, its expected growth path and how your business can get access to the market.

Make a budget: It is just not possible to make an effective business plan without a budget and financial forecast. Making a budget is extremely important so that your business expenditures don’t exceed your income. If your expenditure is more than what your business earns, then you are likely to incur business debt and will have to opt for debt reduction programs.

Don’t ignore your customers: This might sound obvious, but too many entrepreneurs presume they know precisely what their customers need without bothering to ask. You should take time to know about your customers, and create your business plan around their needs and requirements.

Understand the competition: If you think that your company will be the only game in town, then you are greatly mistaken. Also, if you are taking your competitors lightly, then you’re asking for trouble. Therefore, list your competitors – their strengths and weakness in the business plan.

An effective business plan can help you to turn your vision into a coherent business. There’s no warranty it will make your business succeed. But at least a good plan can reduce the chances of incurring business debt. Thereby you don’t have to opt for debt reduction program.

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For more resources, see our Library topic Business Planning.

Ryan is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.

June 29, 2010August 19, 2022

Ask Them and They Will Come

Man in Brown Suit Jacket sitting on a couch

This blog was written by guest writer Andy Horsnell.

While working for a nonprofit capacity building service, I had occasion to put together an “Executive Director Boot Camp” that would help EDs identify and begin addressing issues that were critical for their on-the-job effectiveness. Early in the development of this project, I almost had myself convinced that I knew enough, given my twenty years in capacity building, to just roll it out to the market. Almost. Instead, I invested in interviews and focus groups with about two dozen executive directors to see what I could learn.

I learned plenty. First, make it exclusively for executive directors; resist the temptation to open it up to other senior staff and board members. “We want to be free talk about our issues, without worrying about what our staff and board members might think.” Then they told me the issues what they wanted the session to address, and gave me specific input on the session format, timing, promotion and pricing. They said, “If you can pull this off as we’ve outlined, we’ll happily pay $400 for a two-day session.” This from a group of people who were known to complain about paying $20 for a lunch presentation by an expert on the latest ‘critical issue’.

We launched the program with the initial goal of thirty participants. The common wisdom around the office was, “We’ll be lucky to get twenty. I mean, how many EDs are there that will come up with $400?” Sixty-five, to be exact. And we could have taken another twenty, had we had the room to accommodate them.

In short, the program almost sold itself, because we had the audacity to give our paying customers what they actually wanted, instead of what we felt they needed. It’s a lesson I won’t forget quickly: don’t ever fool yourself into believing that you can think for your customers. It’s so much easier (and effective) to just ask them in the first place and, if you do, they’ll reward you for it.

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Andy Horsnell is an accomplished social entrepreneur with deep roots in nonprofit management, consulting and training. He is the guide to the Social Enterprise section of the Free Management Library.

June 24, 2010February 18, 2022

Business Planning Doesn’t End with Your Plan: Part 2 of 2

hand holding a note that says "business plan" against a corporate background

Rolfe Larson is on vacation. This blog was written by guest writer Jan Cohen.

Regardless of how thorough your business plan is, the start-up period always brings surprises. This is the second of a two part series on lessons learned, based on experiences working with many business ventures.

3. The product or service won’t be what you’ve projected. In a new business with multiple products or a menu of services, it is important to listen to customers (those who buy and those who do not buy) and revise the mix, reshape the product(s) and the services if necessary. Remember that the first six months of a business are an important part of the business planning process. Be flexible in the product line, changing to meet market interest and to keep the customer. When listening carefully to customers, you may find that:

There is less interest in one or some of the products or services you envisioned, but real interest in an additional or different model of the product or service. Suggestions to consider may include changes or additions to features, hours, participants, format, or pricing/payment structure.
There is much more demand than you are ready to provide. Strategize whether there is a way to ramp up, or whether you need to limit the use or number of offerings. Growing too fast is as risky as growing too slowly.
The market takes longer to develop. Marketing strategy changes to prioritize targeted markets are critical, as well as decisions about whether you can wait for the market to develop or change focus to a different targeted customer.
Listen and learn. A new business, especially if it’s your first venture, may require a new and dynamic infrastructure of procedures and forms to assure quick and accurate processing of customers and collection of revenue. You may find that your planning didn’t fully account for this.

4. Let customers shape not only the product but also the message. The best way to get the right message that rings true to targeted customers is to ask them what’s important about this product or service.

5. Word of mouth can be more effective than all other marketing activities. People who know you, your organization, past customers of other services you’ve provided in the past, and those who are in your various networks can often do more to help you through their networks (in person and online) than all of the marketing materials you can create. Focus some efforts on these people.

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For more resources, see our Library topic Business Planning.

Jan Cohen has been a consultant and social enterprise practitioner working with nonprofit organizations for more than 25 years, focusing on earned income strategies and business venture development, start up, and management. FMI LinkedIn or email.

June 22, 2010February 18, 2022

Business Planning Doesn’t End With Your Plan: Part 1 of 2

Bunch of stickers pinned to a brown surface

Rolfe Larson is on vacation. This blog was written by guest writer Jan Cohen.

When you start a new business, whether for profit venture or social enterprise within a nonprofit, you’ve spent a lot of time and effort on the business planning process. And now you are ready to “execute”. The start-up period always has surprises. This two part series shares five lessons learned from working with many business ventures.

1. Your market research, no matter how diligent and thorough, could be wrong. Without thorough knowledge of the actual business you may have interpreted facts or data incorrectly.

It is commonly interpreted that “Waiting Lists = Demand”. But in some businesses, there is a reason for these waiting lists that doesn’t translate into business for you. One example: the competition has a “known” provider or product that people want and substituting you is not of interest to them.
What looks like huge demand could be a temporary surge or interest due to some event or environmental or other factor, rather than a sustained level of demand for the product or service.

2. The economy changes and customer ability and interest and ability to purchase can change dramatically.

When the economy changes as it did two years ago, people may have less need or ability to utilize daycare and other activities for children or pets, restaurants/catering or other services and products. The continued high unemployment rate that is affecting people’s spending dollars now was not forecast two years ago.
If some of your target markets are public agencies, their budgets are also related to the economy. For example, school districts in California had ample budgets to purchase many products services two years ago that they are not purchasing now.

Next blog: Marketing Lessons Learned

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For more resources, see our Library topic Business Planning.

June 17, 2010March 28, 2023

Buy An Existing Business?

Can a nonprofit purchase a for-profit company and operate it as a social enterprise?

This question came up in a recent discussion on the npEnterprise Forum. Incidentally, npE is the official listserv partner of the Social Enterprise Alliance, and, with 7000+ global subscribers, has become the global commons for the social enterprise movement. Subscriptions are free and open to all. I’m one of the moderators.

OK, back to the above question. A lawyer (Arthur Rieman) replied: “In general, an exempt org that wants to engage in a transaction such as [this] can do so provided the transaction is properly structured and documented, on the one hand, and all of the relevant IRS and Attorney General (especially here in California) regulations are heeded. Depending on the actual facts of the situation, your legal counsel should be able to guide you and the organization’s Board of Directors through the processes necessary to make the transaction sufficiently transparent and in compliance with the relevant laws and rules should a regulator come knocking at your door.”

A foundation officer (Ken Ristine) replied (edited for length): “[This topic] demands particular attention to detail regarding how you structure such a deal. The question is, do you want to expose the nonprofit to the legal consequences of [potential product or practice] liability? Are your nonprofit board members willing to accept such a risk? In both cases the answer is probably No.

“One idea then is to structure the for-profit in such a way, say as a wholly-owned subsidiary, that it has its own formal corporate structure. That structure, including a separate board, creates a barrier between the for-profit and the nonprofit regarding issues such as operations, taxation, and liability. But, if the enterprise generates profit, all or part of the profit can flow to the nonprofit.

“This example is only a small look at what you have to deal with. You really need to get together with an attorney and accountant who understand these issues to hash out the details. You may need both someone with small business experience as well as another person who really knows the nonprofit law around structuring related organizations.”

So there you have it. Yes, your nonprofit (probably) can do it, but be sure to get good legal and accountant advice first.

Here’s a useful IRS web site on this: http://www.irs.gov/charities/article/0,,id=96104,00.html

June 11, 2010March 28, 2023

Sample Business Plans

Woman standing beside a laptop on a desk in an office lobby

People are always asking us for examples of business plans, which is a bit ironic, in that every credible plan I’ve ever seen has “Confidential” stamped all over it. That said, there are samples out there, which is fine as long as you don’t assume you should do it the way they did it.

Here are some good places to look for sample business plans:

Palo Alto Software offers more than 100 free plans in 28 different categories. The plans are truly free; their hook is that if you buy their Business Plan Pro software, you can import any number of these plans and edit them to get a good start on your own plan; or use any of the 500+ plans that come with the software.

SCORE, the business advisory nonprofit organization with services delivered by volunteers, provides about a dozen business plan templates.

Entrepreneur lists more than 50 sample business plans in many different sectors.

Center for Business Planning provides business plan “winners” from their Moot Corp Competition, which simulates entrepreneurs asking for funding. MBA students prepare the plans.

About.com provides a fictional “professional” plan “with exceptional graphics and formatting” with (gulp) ten appendices. Their Critical Steps for Business Planning is worth taking a look at also.

The Bridgespan Group offers several sample business plans for nonprofit organizations.

Unfortunately, there is no standard business plan format. Use these samples, and the suggested reading mentioned in my previous blogs, to inform your thinking. Then create a plan (or hire a consultant) that works for your market, for your business and for you. Good luck!

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For more resources, see our Library topic Business Planning.