Basic Business Glossary

• Accounting: the action or process of keeping financial records relating to a particular period or purpose
• Advertising: describe or draw attention to a product, service, or event in a public medium in order to promote sales or attendance
• Assignments: a task given to someone as part of a job

Things to Avoid in a Venture Plan

1. Form over substance. If it looks good but doesn't have a solid basis in fact and research, you might as well save your energy.
   
2. Empty claims. If you say something is so, back it up in the next sentence with a statistic or fact or quote from a knowledgeable source that supports the claim.
   
3. Rumors about the competition. If you know for sure one is going out of business you can allude to it, but avoid listing their weaknesses or hearsay. Stick to facts.
   
4. Superlatives and strong adjectives. Words like major, incredible, amazing, outstanding, unbelievable, terrific, great, most, best, and fabulous don't have a place in a business plan. Avoid ``unique" unless you can demonstrate with facts that the product or service is truly ``one of a kind". Your opportunity is probably not unique.
   
5. Long documents. Keep it under 25 pages total. Write whatever you want to write, but keep it at home. If they want details, they will ask.
   
6. Over estimating on your financial projections. Sure you want to look good, but resist optimism here. Use half of what you think is reasonable. Better to underestimate than set expectations that aren't fulfilled.
   
7. Overly optimistic time frames. Ask around or do research on the Internet. If it takes most companies 6-12 months to get up and running, that is what it will take yours. If you think it will take 3 months to develop your prototype, double it. You will face delays you don't know about yet--ones you can't control.
   
8. Gimmicks. Serious investors want facts, not hype. They may eat the chocolate rose that accompanies the business plan for your new florist shop, but it won't make them any more interested in investing in the venture.
   
9. Typos and misspelled words. Use your spell checker, hire an editor or have four people read the document from back to front, but get those errors out of there if you want to be taken seriously.
   
10. Amateurish financial projections. Spend some money and get an accountant to do these for you. They'll help you think through the financial side of your venture, plus put them into a standard business format that a business person expects.
    

[Thank you, Kaye Vivian]

Sales Tips

Most business owners would like to focus all their energy on daily business operations and serving existing client demands. It's critical to your success, however, to focus on gaining new business from current and potential customers in order to grow and sustain your company.

Budget Considerations

Tips for Creating a New Venture

1. Identify and screen opportunities ... create a vision and concept statement; build an initial core entrepreneurial team; describe the initial ideas about the value proposition and the business model
2. Refine the concept, determine feasibility, and prepare a mission statement ... research the business idea and prepare a set of scenarios; draft the outline of a business plan and an executive summary
3. Prepare a complete business plan with a financial plan and the legal organization suitable for the venture
4. Determine the amount of financial, physical, and human resources required ... prepare a financial model for the business and determine the necessary resources; prepare a plan for acquiring these resources
5. Secure the necessary resources and capabilities from investors, as sell as new talent and alliances
6. Launch the new venture!

[2.14]

Industry Analysis Questions

1. In what industry is your venture? (Use NAICS industry nomenclature)
2. What is your primary NAICS number?
3. What other notable companies are in this industry?
4. What companies are the industry leaders, and why?

Traits of Terrific Teams ...

1. Challenge each other
2. Provide mutual inspiration
3. Perform well in a chaotic environment
4. Maintain control despite the extreme pressure
5. Trust each other
6. Respect each other
7. Share a common vision
8. Open to new ideas
9. Have a sense of humor
10. Have integrity
11. Full of energy
12. Team players
13. Honest and direct
14. Calculated risk-takers
15. Get along with others
16. Able to handle pressure
17. Are inspirational
18. Are doers
19. Are competent in their field
20. Are balanced
21. Are experienced
22. Share leadership and ownership of team tasks
23. Communicate continuously
24. Provide performance feedback
25. Most decisions reached by consensus
26. Division of tasks is clear
27. Collaboration is the norm
28. Share learning
29. Listen to each other
30. Comfortable with disagreements
31. Are cohesive
32. Are mutually supportive
33. Coordinate activities
34. Share work expectations
35. Have complementary skills but a collaborate style

How to Write an Operations Manual

Operating a company without a formal set of rules and regulations is similar to sailing across the ocean without navigational charts. Rarely can objectives be reached in either case without an operations manual that explains "how to do it."

If your business seems to be sailing along without an operations manual, why take the time to compile one: Because there are at least eight ways it can benefit you and your company.

An operations manual...

• Establishes a comprehensive source of company policies and procedures
• Facilitates even-handed, consistent administration of personnel policies
• Promotes continuity in management style throughout the organization
• Helps identify problems before they arise, minimizing "crisis management"
• Reduces the number of emotional decisions, encouraging a businesslike climate of objectivity
• Defines authority clearly and distributes responsibility
• Becomes a training tool for employees
• Offers examples of standard forms, reducing the number and variety of forms used.

In any growing company, no one has the time for an extra project such as creating an operations manual. Top management must personally endorse the project and provide leadership to keep it moving. Establish deadlines and designate a "doer" in your company to get the job done.

Gather all existing procedures, systems, and forms. Talk to all levels of management and staff to get their ideas. Discuss the manual with field employees to ensure that all actual day-to-day working needs will be covered. Input from former staffers can be valuable, too. Concurrently, prepare a checklist of points that should be covered in your company's operations manual.

Consider these eleven basic sections:

1. Introduction: Purpose of the manual; how the company started; business objectives and philosophy; description of products and services; economics of your business.
2. Organizational chart: Who reports to whom; job descriptions; addresses of company's facilities; importance of each department and division.
3. General employee information: Attitude toward customers, suppliers, and other employees; statement on how to handle telephone callers and visitors; housekeeping policies.
4. Personnel administration: Hiring practices; employment forms; when and how workers are paid; outside employment; reprimands; hours of operation; coffee breaks and lunch hours; dress code; personal behavior; frequency of salary reviews; advancement opportunities; benefits paid by the company; contributory benefits; explanation of payroll deductions; labor laws; use of time cards, scheduling; overtime; vacation entitlement and holidays.
5. Products and services: Customer relations; supplier relations; sales procedures; taking pride in what the company does.
6. Operational procedures: Flowcharts, process documentation, detailed directions and procedures for each department. This detailed documentation may not necessarily be part of the “master” manual but instead may be subdivided into appropriate sections which reside in detailed department manuals.
7. Paperwork: Administrative procedures; ensuring accountability; billings; sample of each form; purpose of each document; routing flowchart for paperwork; summary of deadlines and due dates.
8. Safety and security: Protection of physical premises; personal security; statement about protection of company assets; importance of safety to the employee and the company; handling of confidential information.
9. Emergencies: How to handle accidents; what to do in case of fire, power failures, robberies and thefts’ emergency telephone numbers.
10. Maintenance and repair: Telephones; service people; who should authorize repairs; trash removal; key control; handling of equipment; property damage or loss.
11. Legal: Compliance with local, state, and federal laws; handling of regulatory agencies; inspections; record keeping requirements; maintaining ethical standards.

Once you have pinned down what you want to say, how should you say it? Convey the meaning briefly and clearly. Remember that the message is for the benefit of the readers—your employees. Too often, company documents are written either pretentiously (to enhance the stature of the writer) or ambiguously (to protect the writer should a question arise).

Don't fail to put certain procedures in writing just because it seems impossible to cover every eventuality; additions and revisions are inevitable.

Here are several tips on writing the manual:

• Present instructions in a logical order.
• Be specific. State exceptions if those exceptions have occurred frequently in the past.
• Use language and examples that are common to your company's employees.
• Adopt nonsexist language (for example: salesman becomes sales representative or salesperson, watchman becomes guard).
• Have a qualified outsider (preferably an educator or professional editor) do the editing.
• A loose-leaf, three-ring format permits great flexibility in using, reviewing, and updating material. "Sections" should correspond to chapters of a book. Within each section, the material should be in outline form.
• Do not use a "Miscellaneous" section. It becomes a catchall revealing less-than-thorough categorization.
• Each page should contain the section title, the date the page was issued, and a page number. This simplifies both the task of keeping the manual updated and the distribution of new or revised material.
• To complete the manual, prepare a thoroughly cross-referenced index to topics covered.
• A chain of command should be established to make revisions, and one person in top management should approve all proposals for change. Otherwise, duplication and overlap will create confusion.
• Finally, your operations manual should be reviewed at least once a year because, by its very nature, a growing company creates change.

[Thank you, Kenneth R. Chane]

Ten Commandments of a Corporate Entrepreneur

1. Come to work each day willing to be fired.
2. Circumvent any orders aimed at stopping your dream.

Creating a Competitive Advantage

The following questions are designed to help you determine whether you have an identifiable competitive edge and whether you are currently capitalizing on it ...

1. Have I clearly defined my company and my target market?
2. Who are my competitors?
3. What is my company's specific strategy for success?
4. Do I regularly track my competitors' moves?
5. Do I take advantage of my competitors' weaknesses?
6. What have I learned from my competitors' mistakes?
7. What have I learned from my competitors' strengths?
8. Do I take advantage of competitive opportunities?
9. Does my company possess a uniqueness that easily separates it from my competitors? What, specifically, is it?
10. Would I pay money to use my own product or service?
11. How do my prices compare with the rest of my industry?
12. Who are my customers?
13. Do I have a loyal customer base?
14. Am I sensitive to my customers' needs and requests?
15. Are my employees trained in customer service?
16. What trends do I see for my industry in the future?
17. Is my company and my product mix aligned with those trends?
18. Do I have the capabilities and resources to compete in the market five to 10 years from now?
19. What is my vision for my company five to 10 years from now?

If you answered "no" or "I don't know" to more than one of the above questions, you may need some assistance with discovering and/or leveraging your competitive edge.

[Thank you, SCORE]

Finding a Name for Your Venture

There isn't a one-stop place to find out whether a business name is already in use, so it requires some checking around. 

A good start is a thorough Internet search ... If you do come across another business using the name, there are a couple questions to ask: Is the business in the same industry as yours? Is it operating nationally or solely in its local area? Would prospective customers confuse your business with the other business?

Under federal trademark law, a business can claim rights to a name if it's first to use a name in a particular category of business in the geographic area it serves. So you want to determine whether another business in your industry is using the same name in the same geographic region you are. A business still has rights to the name if it is using the name publicly -- even if it hasn't officially registered it for trademark protection.

The next step is to go to the U.S. Patent and Trademark Office's Web site, www.uspto.gov, to see whether another business has officially registered the name for federal trademark protection. Click on "Trademarks" on the left navigation bar. Then click on "Search TM database" on the left to access the trademark search database.

If another business has registered the name, you're typically restricted from using it only if that business is registered in the same category of business as yours or sells the same goods and services. If the businesses are totally different -- say, you're a bakery and the other business using your chosen name is a florist -- then it probably isn't a problem.

But you do want to ensure that your business name won't be confused with another business in your area ... the last thing you want is your potential customers to be confused ... and end up having to change the name.

Some businesses register trademarks only in their state, so check with your state's trademark authority as well. Many states have online databases. You also can hire a naming consultant or a trademark attorney to conduct an exhaustive name search.

Another issue: Make sure there's a domain name available that closely matches the name for your company, since that will be important if you want your business to have a Web presence.

[Thank you, Wall Street Journal]

Traits of a Good Target Market

A business cannot efficiently and effectively solve every prospective customer problem. Rather, successful business ventures begin by serving a particular niche market segment really well, better than the competition.

Venture Plan Outline

1. Opening, Front Page: Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
2. Executive Summary: One-page summary of the key elements of the business plan ...
3. Problem / Opportunity: The problem the venture will solve, the significance of the problem, the opportunity this offers the venture, quality of the opportunity, growth potential ...
4. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
5. Customers and Target Markets: Target market characteristics, why this market is the best for your venture, market validation research ...
6. Business Model: How your venture will earn a profit, expected margins, sources of recurring revenue, vision, mission, goals ...
7. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, competitive validation ...
8. Environment and Context: Industry overview, research results and analysis, major competitors, benchmark ventures, how your venture will position itself to meet the competition, timeliness, regulations ...
9. Marketing and Sales Strategy: Pricing strategies, distribution model, partnering, promotional strategies ...
10. Technology Strategies: Technology, product development ...
11. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
12. Intellectual Property and Legal Issues and Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
13. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, management to be added, culture, talent ...
14. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
15. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
16. Financial Plan: Key assumptions, historical financial statements, pro forma statements, return on investment ...
17. Investment Funds Sought and Use of Proceeds: Total investment funding being sought, use of funds in 4 or 5 general categories, any unusual use of funds ...
18. Harvest Plan: Return of cash to investors and entrepreneurs; most-likely exit method (IPO, acquisition, ...) ...
19. Summary: A brief who, what, where, when, why, and how of the venture; vision and mission ...
20. Appendices and Research: Detailed resumes, research results, product data sheets ...

[2.06]

Critical Path in a Pizza Parlor

How to Make a Decision

1. Define the problem, characterizing the general purpose of your decision.
2. Identify the criteria, specifying the goals or objectives that you want to be able to accomplish.
3. Weight the criteria, deciding the relative importance of the goals.
4. Generate alternatives, identifying possible courses of action that might accomplish your various goals.
5. Rate each alternative on each criterion, assessing the extent to which each action would accomplish each goal.
6. Compute the optimal decision, evaluating each alternative by multiplying the expected effectiveness of each alternative with respect to a criterion times the weight of the criterion, then adding up the expected value of the alternative with respect to all criteria.

[Thank you, Paul Thagard]

Patent Offices on the Internet

1. Australian Patent Office
2. Austrian Patent Office
3. Belgian Patent Office

Good Books for Creativity, Innovation, and Entrepreneurship

• A Whack on the Side of the Head (von Oech) 
• Cracking Creativity (Michalko) 
• Creativity in Business (Ray/Myers) 
• Crossing the Chasm (Moore)
• Democratizing Innovation (von Hipppel) 
• Driving Growth Through Innovation (Tucker) 
• Entrepreneurship ... A Real-World Approach (Abrams)
• Founders at Work (Livingston) 
• How to Get Ideas (Foster) 
• How to Think Like Leonardo da Vinci (Gelb) 
• Innovation and Entrepreneurship (Drucker) 
• Innovator's Dilemma (Christensen) 
• Made to Stick (Heath) 
• The Design of Everyday Things (Norman)
• The Game Changer (Lafley/Charan)
• The Innovator's Solution: Creating and Sustaining Successful Growth (Christensen, Raynor) 
• The Innovator's Toolkit: 50+ Techniques (Silverstein, Samuel, DeCarlo) 
• The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures (Johansson) 
• Thinking, Fast and Slow (Kahneman)
• Weird Ideas That Work (Sutton) 
• What a Great Idea (Thompson)
• 5280 Tips for Innovators and Entrepreneurs (Jindrick)

[2.02]

Venture Plan Guideline

Here are some guidelines for a venture plan.
A typical "first round" investor-grade venture plan is usually about 20 - 25 pages plus separate appendices.
There are many possible outlines for a venture plan ... the following is pretty standard.
Remember, the purpose of a venture plan is to mitigate risk ... you are selling your concept here and need to show the reader that you know your stuff! It's not so much the plan as the planning (and learning and testing and explaining and ...)

A. Cover Page ... Company/venture/business name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...

B. Executive Summary ... independent one page document ... the exact same executive summary that you used to entice the prospective investor or corporate executive to want to read this plan. What is this venture about? Where is the market? What is the innovation and competitive advantage? Who is on the venture team? Why is this a good venture concept (ie, financial projections, et al)? When are the key development milestones? How will this venture come to fruition?

C. Table of Contents ... one page.

D. Opportunity ... tell a story here! Engage the reader! What is the hook, the story, the "grabber"? Two to four pages.

1. Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
2. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
3. Customers and Target Markets: Target market characteristics, size, why this market is the best for your venture, market validation research ...
4. Innovation: What does this venture do that is new and better?

E. Environment and Competition ... Industry overview, research results and analysis, major competitors, benchmark ventures, timeliness, regulations ... three to five pages.

F. Goals and Strategies ... critical and key information as appropriate to your venture ... three to five pages.

1. Goals, vision, mission. 
2. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, competitive validation, how your venture will position itself to meet the competition, ...
3. Business Model: How your venture will earn a profit, expected margins, sources of recurring revenue ... 
4. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ... 
5. Product Development Strategies
6. Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ... 
7. Technology Strategies: Technology, product development ... 
8. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ... 
9. Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
10. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ... 
11. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...

G. Financial Projections ... Key assumptions, historical financial statements (if available), pro forma statement summaries ... four or five pages.

H. Funding Proposal ... independent one or two page document.

1. Resource Requirements: Short summary of financial projections; total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return on investment to investors and entrepreneurs, harvest strategy ...
2. Call to Action: What do you want the reader to do ... join your team, invest, meet with you to learn more ... ?

I. Summary ... A brief summary (sales pitch) of the opportunity, environment and competition, goals and strategies, financial projections, resource requirements, return on investment ...

J. List of Available Appendices ... Variety of support information ... resumes, detailed financial statements, product data sheet, marketing brochure, research data, technology information,detailed competitive analysis, etc.

Business Venture Plan Presentation Guidelines

Here's an outline for a typical business concept presentation. These types of presentations are usually about 15 minutes for the formal presentation, 10 minutes or more for an "interactive discussion."

A.  Opening and Introductions (see 1 below for content suggestions)
B.  Problem/Customer/Solution Opportunity Story (crafted to fit the venture ... see 2, 3, 4 below for content suggestions)
C.  Competition, Environment, Innovation, Competitive Advantage, Differentiation (crafted to fit the venture ... see 5, 6, 7 below for content suggestions)
D.  Earn, Work, Team, et al, as appropriate to the venture (crafted to fit the venture ... see 8, 9, 10, 11, 12, 13, 14, 15 below for content suggestions)
E.  Financial Projections (crafted to fit the venture ... see 16 below for content suggestions)
F.  Funding Proposal, Summary, and Call to Action (crafted to fit the venture ... see 17 and 18 below for content suggestions)
G.  Closing and Interactive Discussion (see 19 and 20 below for content suggestions)

Detailed elements of the presentation include ...

1. Opening Billboard Slide: Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
2. Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
3. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
4. Customers and Target Markets: Target market characteristics, size, why this market is the best for the venture, market validation research ...
5. Environment and Context: Industry overview, research results and analysis, major competitors, benchmark ventures, timeliness, regulations ...
6. Innovation: what the venture does that is new and better
7. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, differentiation, competitive validation, how the venture will position itself to meet/beat the competition, ...
8. Business Model: How the venture will earn a profit, expected margins, sources of recurring revenue ...
9. Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ...
10. Technology Strategies: Technology, product development ...
11. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
12. Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
13. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ...
14. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
15. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
16. Financial Projections: Key assumptions, historical financial statements, pro forma statements, return on investment ...
17. Funding Proposal: Total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return of cash to investors and entrepreneurs, harvest strategy ...
18. Summary: Vision; mission; goals; a brief who, what, where, when, why, and how of the venture ...
19. Closing Billboard Slide: Company name, company location, contact information ...
20. Variety of support slides keyed to most-likely-to-be-asked questions

Recommendations: presenter's name on each slide, company logo on each slide.

Tip: Keep in mind WHO is your audience. WHO are you trying to impress. It's usually NOT everyone in the room, rather it's the decision makers ... the boss, the investor, the president of the company with which you are trying to form a collaborative partnership.

Presentation Tips

To sell your new idea, your innovation, your bright new concept to others, you'll almost certainly be making some presentations, formal or informal. Here are some tips to help you do your best ...