Pursuing entrepreneurship can be risky, with 45% of businesses failing in the first 5 years, but for most of us entrepreneurship is the best opportunity we have to change the trajectory of our lives and impact our families for generations. Creating a business plan is essential to count the cost, weigh your options, and ultimately prepare you for the journey of starting your business. This starts by asking yourself 3 key questions.
Is THIS a business you should start?
The first step to a business plan is determining whether the idea might be successful. It’s important to consider who your customers are and how your product or service compares to your competitors. After that, you can consider where you are going to get your funds and how you will use them. Creating a cash projection can help with this. Equally important is your growth strategy, figuring out how you will get business and how much it will cost to acquire a customer. You also need to evaluate whether your team can address all areas of this idea.
Is this a business YOU should start?
The next thing is to consider why you are uniquely positioned to start this business. This includes having the skills, capacity, credentials, and experience needed to effectively run the company. Being solid in just one area does not necessarily mean you will make a great person. On the flip side, however, you don’t need to be a finance or accounting expert to be a successful entrepreneur.
Is this a business you should start NOW?
The business plan is meant to help you determine how well your idea satisfies all of these areas. If you have tons of capital and a great product then you can add to your team by hire, but if you don’t have the capital or the capacity then it doesn’t matter how good your idea is until you can devise a plan to overcome those obstacles.
The Cultivate Launch Track is a free program designed to help you through the business planning process. Our Basics members get the online course for free, including one discovery consult, online access to the course and other member benefits, worksheets, and additional training lessons. Our PRO memberships are $200/mo, with downgrades available at any time. This includes monthly one on one advisory sessions. Sign up today to get the Launch Track Checklist.
So this presentation is our business launching course. We’re going to go over the process, the plan and the setup for how you can start your new business or how you can more deeply explore the new idea that you have for your business.
I’m Matt Yerkes. I’m the founder of Cultivate and our mission is to help you to keep building a better business. So we have programs like this for aspiring entrepreneurs as well as ones for established small businesses to help you to keep building a better business.
There’s four main ways that we help you keep building a better business. First is we have in person business lessons and networking events that we host every month at all of our locations.
We also have a business dashboard that we can give you so you can see if what you’re doing to grow your business is effective. And we pair that with one-on-one business advising support.
The third thing we do is we provide desks, office and meeting spaces at all three of our locations so those are resources we have available for our members. We also have online business lessons and assignments including this presentation which you can watch online as part of a complete elearning course to launch your business.
Why NOT to Pursue Entrepreneurship
So there’s lots of reasons why you would or would not want to pursue entrepreneurship if you’re trying to start a business or thinking of starting a business. 45% of small businesses fail in the first 5 years and there’s lots of reasons why this happens. There maybe is not enough investigation of the market, you could have a bad location or internet presence or marketing. You could have problems with your business plan, could have too little financing. You could be trying to grow too fast. Or maybe your personal finances aren’t quite ready. So there’s lots of reasons why you may not want to start a small business because the challenge is very daunting. We have to think about why we are doing this in the first place and what we are trying to encourage you to do is to plan, plan, plan and try and get all of your ducks in a row. That’s why we are offering this business launching course is to help you to think through as many of these core issues if you can as possible so that you can improve your chances of success.
Why TO Pursue Entrepreneurship
Ultimately for many of us even though there’s many reasons why we might not want to make the jump and the launch to start our own business, there’s ultimately one reason why many of us take that jump and decide to pull the trigger, why we do want to pursue entrepreneurship.
And the reality is that for most of us the best opportunity that we have to change the trajectory of our life in a way that’s going to impact our family for generations is entrepreneurship. This is the best opportunity that many of us have to do this, to change our whole situation in life. So despite all the reasons why you may not want to start a business, this is an awesome reason why you may want to to start a business.
The Launch Track Course
At the outset of this presentation I want to explain the format of the launch track course So what we’re doing here is an overview of the entire launch track course so you can understand how it works, where all the resources are and understand how it flows. But we have this set up in really three layers. The first layer is the process of how you begin to validate your business idea
and decide if this is even a business, an opportunity that you should pursue. From there we go into the plan in the business planning process and then the last part of the course are the steps, the actual checklist that you will execute to formally launch your business.
The way we offer this at cultivate is our basics members get this online course for free. So this is gonna include a discovery consultation with Cultivate at no cost, it’s going to include online access to the course and other member benefits and as I go through the presentation you’re gonna see icons for worksheets, additional videos and training lessons that you can access as part of the course as a free basics member. In addition there are referrals that we can make to you for vetted resources that can assist you with certain aspects of your business set up.
This could include a connection to a small business attorney, some people to help with your marketing and website, and even a CPA or bookkeeping resource. If you are a PRO member for Cultivate, those are our $200 a month PRO members, you can actually then in addition to all that have one on one advising support with Cultivate every single month. So we are going to work through this whole process with you for launch track, and it’s a month to month program. And if you feel like you would want additional support one on one you can upgrade as a PRO member for that type of support.
The Key Questions
So to start out there’s really the first layer of this presentation are the three key questions that we want you to ask yourself before you start this business. And then as we go through this we are going to give you some tools that you can use to explore these questions much more deeply before you get started on launching your business.
So the first question “Is THIS a business you should start?” And the emphasis here is on this business, this opportunity. Is there really a valid opportunity, a real chance that this business can be successful, that is a great idea, that customers will pay for? The second question “Is this a business that YOU should start?” And the emphasis here is on you personally and what we’re trying to get is are all the things organized in your life to do this? Do you have the skills and experience? You know, the emphasis is really on you; is this something that you have the capacity in this part of your life to do this business? And the third questions is “Is this a business you should start NOW?” and obviously the emphasis here is on the timing of this so it’s not that its not a great idea, or that you’re not ideally set up with the skills and expertise to do this, but there are other reasons with, between your personal finances or other things that you may have going on in your life where this may not be the right time to start this business. So we’re going to help you explore these deep questions. We want you to do that before you make the jump to trying to start your business.
So the goal here for your business plan is not to convince Cultivate, it’s not to convince a banker or the shark tank that are going to judge your business to see if it will be successful. The goal is to objectively convince yourself that this is a business that is worth risking the next two years of your life, your life savings, potentially personal bankruptcy, and even your personal relationships. Is this business worth all of those risks? So the business plan is designed to help you count the costs, to weigh your options, and to prepare for this journey. It’s just like you wouldn’t build a house without first creating a blueprint for the plan. So that’s what we are trying to do, is to help to you reduce and lower all these potential risks to you personally, your life and your finances before you take the jump and start spending money on this business or idea.
Is THIS a business you should start?
So the first set of questions that we want to explore, ”Is THIS the business you should start” and to do that we want to explore 4 main areas. We are going to talk about your product, your capital, your team and your growth strategy. So for your product, do you have a product or service that people will want to buy? And we want to dig deeper in understanding what validation you have for that. The second question is how much capital, how much money are you going to need to start this business and not just to start it but to see it through to the point where it can be successful and it is generating profit for you. The third is do you have a team that has everything among this team for you to be successful? Now what does that look like? And the last question is how are you going to grow this business? What is the strategy? Who’s going to actually be responsible for getting new customers and what does that going to look like?
The first area we want to explore for your product is to better understand your customers. We want to know what is the problem that your customers face? How do they currently solve this problem? How does your product or service solve this problem? Next we want to take a look at what is your Unique Value Proposition? You may think of this as your elevator pitch but this is much much deeper than that. This is going to drive really all of your marketing and sales efforts. This is really going to be key to your success. So your Unique Value Proposition, or your UVP, this is a clear statement in line with your market’s challenges and desires communicating your unique contribution your company, products and services provide to your market that is different from your competitors. So we have a whole video lesson that is part of the elearning course on how to communicate to your customers what you offer and why buy from you. And we also help people with our PRO membership with one on one advising support to help you formulate and articulate this. The next thing we want to understand is what is your call to action, what is this first step that your customers are going to take to begin this journey, to go down this pathway of becoming a customer. How is this going to help them move towards building trust with you to where they can become a customer? Most often this is going to be a button or a link or a tagline in an ad but this is what we need people to do to take this first step to become a customer.
The next area of your product that we want to better understand is how this product or service fits into the marketplace. Is this something that is a completely new idea where there’s really no validation for this business concept that you are trying to put out there? Or is this a business that is fairly typical, fairly common that there is already validation that people need this product or service? That’s going to make a big difference in the success of your business. We also want to understand what is unique and special about your business? You know, it’s going to be much more difficult to start an idea that has never been done before. But if you are doing something that has been done before, then you still need to be able to stand out from your competition.
So the next area we want to look at is do you have any type of intellectual property that’s going to be needed for this business? Do you have patents or copyrights or some kind of intellectual property that’s going to make you stand out? It’s not necessarily that you have to have that but we want to understand how are you different from your competition. So what we are going to ask you to do is to build a Competitive Feature Matrix, to list out the main competitors that you have and the features that they have compared to what you have and so you can really understand which of these things that you have, have the most appeal and exclusivity for your business. When we think about our competitors, we don’t necessarily want to only think of businesses that have a very similar product or service. You may also think of other ways that people are solving these problems as a competitor.
Capital: Cash Projection
The next area we want to look at for, “Is THIS a business you should start” is we need to understand what amount of capital is required not just to start this business but to see it through. And to do that you have to make a budget and a cash projection. So we have a budgeting and cash projection spreadsheet template that we can use and a whole video lesson on how to use this. But basically what we are trying to do is really build a forecast that can show us all the cash inflows and the cash outflows including how much money you are starting this business with. So we can create a cash projection. This cash projection is going to be one of the most essential tools that you have as an entrepreneur to really see what kind of runway you have and it’s going to help you to make better business decisions. So you are going to be able to see moving out into the future what months your business is going to have cash and what months your business may not have cash. So you can begin early on to develop a strategy to change that because the moment you run out of cash your business or your idea is going to die.
So with our cash projection we first start by looking at all the cash inflows you need for this business. We’re going to look at how much money is going to be needed to start the business. We’re going to understand when that start up cash is depleted. We are going to identify where you’re getting all the different funds that are needed to start this business. And we’re going to project at what point your customer revenue is going to begin to increase your cash position as opposed to just depleting the savings or investments that you might have or a loan that you might have to start the business in the first place.
The next part of the cash projection is to look at the outflows. What are all the costs that you are going to incur to start this business? There’s lots of different kinds of costs. You have one time setup costs, you have fixed costs for parts of the operation, you have variable costs for the operation. You need to get all of this into a budget and cash projection so that you know what those costs are and when you are going to incur those expenses. We’re trying, you need to understand how much it costs to produce each incremental product or service or customer you’re trying to serve. We need to understand how much it is going to cost to acquire a new customer? This is a number that can be very difficult for a new business to project. We’re going to help give you some tools so you can plug in something so you can figure out how much it’s going to cost you to acquire a new customer. You know oftentimes this is going to be one of the biggest things that influences the rate of growth that you’re going to have, is do you have enough money to re-invest to acquire new customers? And ultimately we need to understand what is your break even point? At what point is the business going to break even and make money?
Key Members: You
The next area we need to explore in understanding if this a business you should start is to understand the team. And you’re the first part of the team. So we need to know what relevant skills, talents or experience do you have for this business that you hope to start. Do you have all the knowledge and training and credentials or do you need to take some time to do some things to prepare for that and to get those things first.
You know if you were hiring yourself for that position, why should you get this job?
You know, what are the areas where you’re strongest and what are the areas where you’re weakest? And how can you get help in those areas where you are not as strong as you need to be to be successful for this business?
Key Members: Your Team
The next part we want to look at when it comes to your team, is what positions do you need to be successful? Who will be the members of the team? How are they suited to address these important jobs? And what kind of skin do they have in the game?
And so ultimately, do you have a team that can do everything that is needed for you to succeed?
The fourth element for “Is this a business you should start” is your growth strategy. We need to understand how will you get business. What is the strategy that you’re going to have to get new customers? How does that actually work? You know, How does the business model and the selling channels that you have, how is that going to facilitate new customer growth? So we have a whole process for this called the Growth Track, on how to grow your business and that’s part of the elearning course is we include that whole session. But we really need to nail that down before you go to battle with this new business is, understand what their growth strategies are going to be, and is that a viable growth strategy.
The next four things we want to look at is, “is this a business that YOU should start”, the emphasis being on you. And were going to look at the capacity, skills, credentials and experience that you have to be successful for this business. So what we’d like to bring out that just because you’re really great in one of these areas doesn’t necessarily make you a great business person, and give you all the things that you’re going to need to be successful as an entrepreneur. On the flip side, you don’t need to be necessarily a finance or accounting expert to be an entrepreneur, but you’re going to have to have some general level of skill, capacities, credentials and experience to do this.
So the first question, set of questions we need to ask, is do you have the skills to do this? Do you have the skills to produce the product or service? Do you have the skills to sell your product or service? And do you have the skills to really manage all the aspects of the business? As an entrepreneur you’re going to have to wear all the hats in the business at least initially, unless you have partners or employees that you can afford to hire to do these things. So do you have the skills needed? What are the weak areas that you’re going to need to shore up?
Next do you have the experience needed to start this business? Do you have the experience providing this type of product or service? Do you have the experience selling to this customer segment? Do you have the experience going through this type of sales channel that you’re proposing? Do you have experience using this type of cost structure? These are all important experiences that you’re going to need to have if you’re going to be successful.
The third area we are going to need to look at for you are your credentials. You know, do you need to have certain kinds of licenses or certifications, even a particular degree? Or do you need a certain kind of professional reputation to be successful as a credential for this business? We routinely talk to folks that are perhaps starting a food based business. And they may not be licensed or have a serve-safe certification to even begin a food based business. So before they can even start their business they need to take some classes to get those kinds of certifications. On the other hand we meet with people that may be trying to start a consulting business or coaching business and they may not have yet built a professional reputation with a strong professional network that is going to really be needed for them to be successful.
The fourth thing we are trying to look at for you personally, is your capacity. So this is very important and by your capacity there is really several different areas that we need to understand, that you need to understand before you make the jump to start this business.
The first is do you even have the time to start this business? If you’re unable to quit your day job and devote yourself the proper amount of hours each week it’s going to be needed to execute this business. Or do you have just a lot of other responsibilities in your life? Maybe you have to take care of children, or an adult, loved ones, or other family members? Or you know you have all these other things that are constraining your time, you may not even have the capacity at this point in your life to start this business.
The next thing that’s going to be important is your credit score. If you are relying on getting some kind of a small loan, even a microloan, you’re almost always going to have to have a credit score, a personal credit score of over 600, ideally over 650 or 700. So if you don’t yet have your personal finances in order, this is going to be very difficult if not impossible for you to get any kind of small business loan or funding.
The next step is a cash cushion. Again, back to your personal finances. If you do not have any extra cash or savings right now, you are probably not going to be able to start this business. This is going to be very difficult. It’s not that it can’t be done, but you’re going to have to get very creative, if you don’t have a cash cushion, some amount of savings set aside. If your personal finances are depleted right now it certainly is not going to get easier during the early days of your business. So we want to help better understand your household finances in general. Do you have a positive net worth? We’ll help you fill out a personal financial worksheet so you can assess that. What is your credit score? Give you some tools to figure that out and make a personal household budget so you know if you have a cash cushion.
And if you don’t have these things you can at least put yourself on a pathway so you know what you need to obtain. Put yourself on a pathway so you can time the start of your business and at a point out in the future where you have all these things organized together.
Is This a Business You Should Start NOW?
The next big question we are going to help explore in the launch track course is, “Is this a business that you should start NOW?” And what we mean by that is we have looked at these key eight areas; your growth, your product, your team, your capital, your capacity, your skills, your expertise, your credentials. Do we have all these things coming together right now? Is this a business that really satisfies all of these key areas? You think of these 8 points as the things that are anchoring this whole idea, this whole business together. You know certainly a couple of them can be weaker than others, but you have to have something for all 8 of these areas or you’re not going to be successful. We would encourage you to just put a pause on launching this business until you do. So most people aspire to be an entrepreneur but can’t get settled on an idea. So if you find yourself in that situation you can also use these 8 key areas to really weigh all the different ideas that you have to see which of these is the strongest idea. So that would be a good place to start by weighing your idea on these 8 key points.
Launch Track Checklist
So the business planning template that we give you is a complete 16 or 17 page document, that leads you through questions to explore and articulate all these things that I’ve just been going through. And then culminates with the Launch Track Checklist. These are the actual steps that are designed in a specific sequence that you need to do then to officially launch your business. So this begins with the business set-up. So choosing a name, getting a business address, setting up the LLC as a legal or whatever your legal entity is going to be with the Ohio Secretary of State. Getting an employer tax ID, getting a vendor’s license and getting set up with the Ohio Gateway. Getting some kind of commercial liability insurance. The next area is your marketing setup. To select and purchase a domain name, to set an email with your domain name. Creating a website, designing a logo, getting some business cards, setting up your social media profiles. So there’s a whole set up process to do those things.
Next is the financial setup. So this is going to mean getting a business checking account, getting a credit card that is only specific for business charges, to keep those separate from your personal expenses. Getting your bookkeeping tracking set up and then potentially setting up some kind of point of sale or invoicing system so that you can get paid from customers. And then lastly is your payroll and other kinds of setup. So you have to determine if you’re going to have W-2 employees or if you’re just going to use 1099 subcontractors. If you have a partner, you’ll need to formulate and sign some kind of an operating agreement, potentially some kinds of partnership agreements. If you have any kind of facility you might have to sign a lease or some kind of agreement to use a facility and then lastly you’ll need to register copyrights, trademarks and patents if that’s applicable to you.