Category Archives: Starting a Business

Venture Capital Criteria

Most venture capital firms concentrate primarily on the competence and character of the proposing firm’s management. They feel that even mediocre products can be successfully manufactured, promoted, and distributed by an experienced, energetic management group. They know that even excellent products can be ruined by poor management.

Next in importance to the excellence of the proposing firm’s management group, most venture capital firms seek a distinctive element in the strategy or product/market/process combination of the firm. This distinctive element may be a new feature of the product or process or a particular skill or technical competence of the management. But it must exist. It must provide a competitive advantage.

After the exhaustive investigation and analysis, if the venture capital firm decides to invest in a company, they will prepare an equity financing proposal. This details the amount of money to be provided, the percentage of common stock to be surrendered in exchange for these funds, the interim financing method to be used, and the protective covenants to be included.

The final financing agreement will be negotiated and generally represents a compromise between the management of the company and the partners or senior executives of the venture capital firm. The important elements of this compromise are ownership and control.

Ownership

Venture capital financing is not inexpensive for the owners of a small business. The venture firm receives a portion of the business’s equity in exchange for their investment.

This percentage of equity varies, of course, and depends upon the amount of money provided, the success and worth of the business, and the anticipated investment return. It can range from perhaps 10% in the case of an established, profitable company to as much as 80% or 90% for beginning or financially troubled firms. Most venture firms, at least initially, don’t want a position of more than 30% to 40% because they want the owner to have the incentive to keep building the business.

Most venture firms determine the ratio of funds provided to equity requested by a comparison of the present financial worth of the contributions made by each of the parties to the agreement. The present value of the contribution by the owner of a starting or financially troubled company is obviously rated low. Often it is estimated as just the existing value of his or her idea and the competitive costs of the owner’s time. The contribution by the owners of a thriving business is valued much higher. Generally, it is capitalized at a multiple of the current earnings and/or net worth.

Financial valuation is not an exact science. The compromise on owner contribution’s worth in the equity financing agreement is likely to be lower than the owner thinks it should be and higher than the partners of the capital firm think it might be. Ideally, the two parties to the agreement are able to do together what neither could do separately:

1. grow the company faster with the additional funds to more than overcome the owner’s loss of equity, and

2. grow the investment at a sufficient rate to compensate the venture capitalists for assuming the risk.

An equity financing agreement with an outcome in five to seven years which pleases both parties is ideal. Since the parties can’t see this outcome in the present, neither will be perfectly satisfied with the compromise reached. The business owner should carefully consider the impact of the ratio of funds invested to the ownership given up, not only for the present, but for the years to come.

Control

The partners of a venture firm generally have little interest in assuming control of the business. They have neither the technical expertise nor the managerial personnel to run a number of small companies in diverse industries. They much prefer to leave operating control to the existing management.

The venture capital firm does, however, want to participate in any strategic decisions that might change the basic product/market character of the company and in any major investment decisions that might divert or deplete the financial resources of the company.

Venture capital firms also want to be able to assume control and attempt to rescue their investments, if severe financial, operating, or marketing problems develop. Thus, they will usually include protective covenants in their equity financing agreements to permit them to take control and appoint new officers if financial performance is very poor.

John B. Vinturella, Ph.D has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Applying for a Loan

In making loan requests, entrepreneurs tend to be confident that they will meet or exceed what they consider conservative financial projections. They then have trouble understanding when they receive a less than enthusiastic response. To complete the picture, however, we need to look at the process from the banker’s perspective.

“What bankers view as a good loan application is at times different from what applicants think,” says Ray Fincken, vice president of HSBC Bank USA in New York. “Applicants know the bank needs information about their company to process the loan. So in the first interview they often describe all the good things happening within their company — focusing mainly on marketing and sales.

“However, bankers are usually more interested in assessing risk and consequently learning that the company has a good core foundation. Does the company have experienced management? Do these managers have various talents and experiences to guide the company through good times and bad?”

Given confidence in the management team, the bank must look at the elements of the business plan from a more objective standpoint than the entrepreneur ever can. The critical consideration is whether the company’s major products or services provide sufficient profitability and cash flow to meet all its financial obligations, particularly payments to service the debt under consideration.

If the company is a startup, the best indicators are often the norms for the business in which the company will be competing. Are projected margins and ratios in line with others in their industry? The bank will also look at credit reports and tax returns on the key individuals involved in the startup.

If the company has some financial and credit history, the bank will check corporate tax returns and financial statements, individual financial statements, liens, litigation, agency reports such as Dun and Bradstreet, etc. To ensure finances are in order, Ray recommends receiving your personal and business credit reports prior to seeking a loan to make sure the information is correct before going through this process. Misinformation or old loans and liens may erroneously still be on the report. Taking care of these errors prior to applying for a loan can streamline the process.

Fincken says: “We look for consistent, sound cash flow from operations and good, quality assets. We look at these because they are the primary sources of repayment. We then analyze this information and compare it to other similar businesses as a guide.”

Once the records are in order, the next step is the bank’s formal application process. “Planning ahead will help you increase your chances of receiving a loan as well as streamline the loan timeline,” Fincken advises. “Put together a business plan and description of why you need financing; include three years of financial statements or projections.”

Expect to be asked, and prepare your answers to the following questions:

• How much money is needed?

• What is the purpose of the loan?

• How long do you anticipate using the money?

• How will the company be able to pay back the loan?

• How will the bank get paid if something goes wrong?

Here is a list of the most common reasons for loan denials:

• The company is deemed unable to repay the loan

• There is inadequate financial information

• The financial statements are unprofessionally prepared

• There are perceived critical weaknesses in management

• Applicants fail to demonstrate their ability to implement sound accounting and management information systems.

You would certainly be reluctant to extend credit to a prospective customer where you had significant doubt of their ability to pay. Remember that the bank’s business is to lend money, and that they must apply the same discretion to your request.

John B. Vinturella, Ph.D has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Buying an Existing Business

One alternative to starting a business “from scratch” is to buy an existing business. To some extent, buying a business is less risky because its operating history provides meaningful data on its chances of success under our concept. We must, however, balance the acquisition cost against what the cost of a startup might have been.

Small-business sales are generally (on the order of 94%) sales of assets, with no assumption of liabilities; only about 6% are sales of company stock. Often the seller finances part of the purchase; typically the buyer makes a down payment on the order of one-third of the sales price, with repayment terms of five years at market rates. Do you see any danger for the seller in financing the sale?

If the decision is made that purchase of an existing business could improve our chances for success, we must then evaluate existing businesses to determine whether any are available at a price that is economically more favorable than a new venture. The most difficult issue in small business sales is establishing a selling price. It is an inexact science, characterized by a seller’s too-high expectations, and an overly skeptical prospective buyer.

Due diligence must be performed before a binding offer is made. Is the company’s history and network of business relationships clear? Are their financial statements representative? What do they say about the business? Are there any unstated dangers or risks? Are there any hidden liabilities? Often, a review of the financials by our banker and accountant can be valuable.

Intangible factors must also be considered, such as the seller’s reasons for offering the business for sale. Often these are for personal and career reasons, such as a readiness to retire with the absence of a successor, or another opportunity perceived as a better fit. Business reasons might include personnel problems, or a weak competitive position. Where business reasons predominate, we must decide whether all that is missing is a quality of management that we can provide, or whether there are some changes that we can make in the way the business is operated that will make the difference.

How “good” an organization is it? How do its customers and suppliers perceive it? If we do not buy it, how tough a competitor will it be? What will be the effect of an ownership change on the customer base, supplier relations, etc.? How much customer loyalty is to the business, and how much to the current owner?

Does the company have a “niche?” Is it the one in which you want to operate? Is there a competitive advantage to the operation that is sustainable? Are its assets useful to you? Will key personnel remain with the business?

Once we have gathered the necessary information, we may decide to extend a purchase offer. We should decide on a bargaining range before we go into any negotiating session. If we cannot meet on price, perhaps concessions on payment terms could make up the difference. We should know the tax and legal consequences of our options. If the discussion takes us outside our range, we should schedule another session, and reanalyze the data. We must allow for the possibility that the deal cannot be made.

Ultimately we must decide whether the purchase, at a price that the seller will accept, gives us a better chance of success than starting from scratch in competition with the business. Perhaps the seller’s errors would start us in a deficit position; we might prefer creating our own corporate culture and customer relationships; maybe we can find a better location, facility, newer equipment, etc. On the other hand, the cost of taking sufficient business away from existing firms could be ruinous.

It must be emphasized that there is no one correct value for a business. Any valuation is based on assumptions, and projections of future performance. Discomfort about basing financial decisions on assumptions and projections is natural. Entrepreneurship requires exploring uncharted territory, and operating in an environment of uncertainty. Success depends on applying our best judgment to reducing that uncertainty.

John B. Vinturella, Ph.D has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Evaluating Business Planning Software

Abstract: Once a business idea is selected, it is highly recommended that we sharpen the concept by a detailed planning process. While this may seem a daunting task to first-time entrepreneurs, many “veterans” have found that there are software packages that can help to organize and format the material required for a comprehensive plan.

Once a business idea is selected, it is highly recommended that we sharpen the concept by a detailed planning process. The result of this step is a comprehensive business plan, with its major components being the marketing “mix,” the strategic plan, operational and logistical structures, and the financial proposal. The purpose of the business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort.

While this may seem a daunting task to first-time entrepreneurs, many “veterans” have found that there are software packages that can help to organize and format the material required for a comprehensive plan. These packages are particularly helpful to those who are intimidated by starting from a blank piece of paper.

So is there a downside to purchasing software that has most of the text “in place?” The text is not always well-written, “fill-in the blanks” tends not to produce very fluid copy, and the parts you write may be in a different style than the words surrounding it. Some experts suggest that the real usefulness of such packages lies in the examples, when they are in a business similar to yours.

The sales leader in “plan-ware” is Palo Alto Software’s Business Plan Pro (BPP, paloalto.com). We have tried several packages that are comparable to BPP; you should evaluate a few to find which might fit your unique style best. Figure a price point of about $120 for standard versions of all. Others to consider would be:

 Planware’s PlanWrite (planware.org)

 PlanMagic’s Business (planmagic.com)

In addition to BP software, you may want to consider online services.

 Fundable Plans (fundableplans.com); $40 per use

Some of the factors that you would want to consider in your evaluation are:

User-friendliness – easy to get productive quickly; self-guiding, not having to go back-and-forth with instruction manual or help screens; “wizards available for some functions.

Interface – the package works with the other software that you will need in the process, such as Word, Excel, and PowerPoint.

Support – free technical support by telephone or email; useful help screens; program updates; and, resources such as articles and links that assist in the business planning process.

Features – functions beyond the basic “fill-in-the-blanks” templates, such as PowerPoint templates; market research data; industry codes; lots of rich examples; and, assistance with the more technical aspects of the plan, such as finance and strategy.

One of the dangers of using such packages is that your focus may shift from producing a complete and convincing plan to simply filling out the templates. Their real value lies in their support of getting it in writing.

Many entrepreneurs insist that their business concept is so clear in their heads that the written plan can be produced after start-up; this attitude “short-circuits” one of the major benefits of producing the plan. The discipline of writing a plan forces us to think through the steps we must take to get the business started, and, to “flesh out ideas, to look for weak spots and vulnerabilities,” according to business consultant Eric Siegel.

A well-conceived business plan can serve as a management tool to settle major policy issues, identify “keys to success,” establish goals and check-points, and consider long-term prospects. The plan must realistically assess the skills required for success of the venture, initially and over the long run, and match the skills and interests of the team to these requirements. Test the plan, and an accompanying oral presentation, on friends whose business judgment you value. Let them assume the role of a prospective investor or lender.

John B. Vinturella, Ph.D has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Used-Book Case Study

This is a case study to sharpen your skills at forecasting and break-even analysis.

Dwight Payne and Gary Heap reside in Santa Barbara, CA, where they attend college and pursue their mutual hobby of science-fiction book collecting. They pooled their book collection of over 4,000 volumes, and sci-fi magazines going back over twenty-five years. All neatly cataloged and indexed, they estimate it would cost $20,000 to assemble the collection today.

Payne and Heap decided that, at the end of this school year, they will dedicate the summer to getting a used-book store started in Santa Barbara as a means of supplementing their income year-round. Heap’s uncle owns a storefront near the University, and agreed to rebuild it as a used-book store. He also co-signed an inventory loan for $4,000 for some start-up working capital. In exchange he gets 25 percent of store sales for two years.

In addition, they bought a collection of over 10,000 paperbacks, magazines, and comics for $3,500, and some used shelving for $1,500. These purchases required borrowing the money from some fraternity brothers.

Provide business strategy planning advice to Dwight and Gary (There is no one right answer).

Decide on days of the week and hours the store will be open. Estimate staffing required and hourly salary costs. Do Dwight and Gary really work for free? What is a reasonable expectation of customers per day? Average purchase per customer? What are pessimistic and optimistic values of these estimates? How much will they have to spend on advertising and promotion to meet these estimates?

What will they pay, on average, for each book? How much can they get, on average, for each book?

Put together a projected (often referred to as pro forma) income statement. Relate the estimates developed above to monthly sales (pessimistic, expected, and optimistic), cost of goods, and expense amounts for wages and promotion. We should add 25% to wages paid for the payroll estimate, to account for taxes, sick days, etc. Debt service payments may be assumed to total $400 per month. Estimate rent and utilities and any other expenses that you feel might be incurred.

Conclusions: Find a break-even sales estimate, that is, the value for sales that produces a Gross Margin just equal to Total Expense. When gross margin generated equals expenses, profit/loss is equal to zero; this sales level is called the break-even point.

Would you do it if you were they? Why or why not? What kind of a test is this where you can’t look up the answer? It’s an entrepreneurship test; learn to be comfortable with your best estimate. If you are not comfortable with this seek consulting services for small businesses.

John B. Vinturella, Ph.D has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Venture Research Service Provider

If you are considering buying or selling a service industry business you need to start with an evaluation. This can be very complex and the use of a venture research service provider can often give you a value that you can easily defend. The following article outlines the process, and is extracted from FBB Group Ltd: https://www.fbb.com/company-information/recentarticles/how-to-value-a-service-business.

Service businesses run the gamut, from accounting firms, to drycleaners, to janitorial services, engineering, public relations firms, and many other options. Despite their disparity, they all have one thing in common: offering a service to clients.

Valuing a service business involves many factors – a tidy, one-size-fits-all formula doesn’t exist. That being said, sellers should recognize that buyers will be particularly interested in certain characteristics for most service businesses. This, again, is where a venture research service provider can come in.

Normally, valuation is based on several criteria, including: history of profitability, cash flow, overhead, intellectual property, company reputation, number of years in business, opportunities for further growth and added profits, stability of key employees/management team, and customer diversification.

Crucial areas for valuation include intellectual property, ongoing relationships with clients, and having a good team in place – ensuring the company will retain its competitive edge, even when the seller (who typically drives new and repeat business) leaves.

Without significant capital assets, key customers and employees are critical. A strong management team adds to the value of a service business (often more so than in manufacturing) and, conversely, it can detract from value when there’s a poor or inexperienced team.
Another measure of value may include the amount of market share. Companies that provide a niche service and don’t have much, if any, competition will command higher multiples of value.

Cash flow is “king,” so the primary consideration for bankers is a buyer’s ability to stay current on loans for acquisitions and working capital. Banks focus heavily on reliable cash flow for service businesses, given that there is little, to no, collateral within the service business itself.

Whether you’re in the market to buy or sell, understanding the various considerations of valuation for a service business will make the process smoother and increase the probability of a more successful transaction.

Dr. Vinturella, has over 40 years experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site https://www.jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business. “ See https://www.jbv.com/8steps, available on Amazon.

Entrepreneurial Career Consulting

The following is excerpted from Careers in Entrepreneurship, http://careers-in-business.com/en.htm. If you find it overwhelming, consider entrepreneurial career consulting. There are sources of free consulting such as SCORE, http://www.score.gov.

Entrepreneurs start new businesses and take on the risk and rewards of being an owner. This is the ultimate career in capitalism – putting your idea to work in a competitive economy. Some new ventures generate enormous wealth for the entrepreneur. However, the job of entrepreneur is not for everyone. You need to be hard-working, smart, creative, willing to take risks and good with people. You need to have heart, have motivation and have drive.

There are many industries where wealth creation is possible be it the Internet and IT, personal services, media, engineering or small local business (e.g., dry cleaning, electronics repair, restaurants).

But there is a downside of entrepreneurship too. Your life may lack stability and structure. Your ability to take time off may be highly limited. And you may become stressed as you manage cash flow on the one hand and expansion on the other. Three out of five new businesses in the U.S. fail within 18 months of getting started.

It’s important to be savvy and understand what is and is not realistic. The web is chock-full of come-ons promising to make you rich. Avoid promotions that require you to pay up front to learn some secret to wealth.

Look for inefficiencies in markets. Places where a better idea, a little ingenuity or some aggressive marketing could really make a difference. Think about problems that people would pay to have a solution to. It helps to know finance. It’s a must to really know your product area well. What do consumers want? What differentiates you from the competition? How do you market this product?

A formal business plan is not essential, but is normally a great help in thinking through the case for a new business. You’ll be investing more in it than anyone else, so treat yourself like a smart, skeptical investor who needs to be convinced that the math adds up for the business you propose starting.

John B. Vinturella, Ph.D. has over 40 years’ experience as a management and strategic consultant, entrepreneur, and college professor. He is a principal in the business opportunity site jbv.com and its associated blog. John recently released his latest book, “8 Steps to Starting a Business,” available on Amazon.

Franchise Business Consultant Service 2

A franchise is a continuing relationship between a franchisor and a franchisee in which the franchisor’s knowledge, image, success, manufacturing, and marketing techniques are supplied to the franchisee for a consideration. This consideration usually consists of a high “up-front” fee, and a significant royalty percentage, which generally require a fairly long time to recover.

Here are some statistics about the industry (http://www.azfranchises.com/quick-franchise-facts/):

• There are an estimated 3,000 different franchisers across 300 business categories in the U.S. which provide nearly 18 million jobs and generate over $2.1 trillion to the economy.

• Franchises account for 10.5 percent of businesses with paid employees; almost 4% of all small businesses in the USA are franchises.
• It is estimated that the franchise industry accounts for approximately 50% of all retail sales in the US.

• The average initial franchise investment is $250,000- excluding real estate; the average royalty fees paid by franchisees range from 3% to 6% of monthly gross sales.

Franchising offers those who lack business experience (but do not lack capital) a business with a good probability of success. It is a ready-made business, with all the incentives of a small business combined with the management skills of a large one. It is a way to be “in business for yourself, not by yourself.”

Franchises take many forms. Some are simply trade-name licensing arrangements, such as TrueValue Hardware, where the franchisee is provided product access and participation in an advertising cooperative. Some trade name licenses, particularly in skin-care products, are part of a multi-level marketing system, where a franchisee can designate sub-franchisees and benefit from their efforts.

Others might be distributorships, or manufacturer’s representative arrangements, such as automobile dealerships, or gasoline stations. It could be Jane’s Cadillac, or Fred’s Texaco; the product is supplied by the franchisor, but the franchisee has a fair amount of latitude in how the business is located, designed and run. The franchisor will frequently specify showroom requirements and inventory level criteria, and could grant either exclusive or non-exclusive franchise areas.

The most familiar type of franchise, however, is probably the “total concept” store such as McDonald’s. Pay your franchise fee, and they will “roll out” a store for you to operate.

The advantages can be considerable. The franchise fee buys instant product recognition built and maintained by sophisticated advertising and marketing programs. The franchisor’s management experience and depth assists the franchisee by providing employee guidelines, policies and procedures, operating experience, and sometimes even financial assistance. They provide proven methods for determining promising locations, and a successful store design and equipment configuration. Centralized purchasing gives large-buyer “clout” to each location.

The large initial cost can be difficult to raise. The highly structured environment can be more limiting than it is reassuring. Continuing royalty costs take a significant portion of profits. You may wish to use a franchise business consulting service. Several small business periodicals evaluate and rank franchise opportunities. There are now several franchise “matchmaking” firms who can assist in the evaluation process.

How do you choose among all the available franchises? Does it complement your interests? Even if you hire someone to manage the business, expect to spend a lot of time with the operation. Is the name well known? If not, what are you paying for? Is the fee structure reasonable, and all costs clearly described?

Is the franchisor professional? Evaluate them on the clarity of the agreement, and how well your rights are protected, the strength of their training and support program, and their commitment to your success. Be sure to talk to current franchisees about their experiences. Beware of a franchisor committed to a rate of growth that exceeds their ability to manage; they may not be sufficiently interested in the sales they have already made.

Is a franchise a sure path to instant riches? Is it the only hope for independent firms in today’s market? Can Jerry’s Quick Oil Change compete with SpeeDee? Does the franchise deliver business that we might not have gotten anyway? Is it really entrepreneurship; did I go into business or did my money?

This is excerpted from “8 Steps to Starting a Business.” See https://www.jbv.com/8Steps

Franchise Business Consultant Service 1

Franchising provides a way for franchisors to grow their businesses more quickly than they could on their own. For franchisees, it reduces the probability of failure. Substantial personal resources are required to pay the franchise fee and all the other costs associated with start-up. The franchisor may or may not provide assistance with financing.

Often entrepreneurs engage a franchise business consultant to help evaluate and select the best fit to the buyer. Franchise models, investment, and requirements vary widely, so it is imperative that the potential franchisee conduct thorough due diligence before proceeding.

Franchising provides the entrepreneur with an opportunity to enter the world of small business without all the risks usually associated with starting a business from scratch. In most cases, the costs of entering a franchise are less than the costs of buying an existing business. If dealing with a reputable franchisor, buying a franchise represents the acquisition of a proven business model, thus reducing the odds of failure considerably. Franchises are big business. Franchises are very important to commerce accounting for 45% of retail sales, or $1.55 trillion in total revenue in 2010, according to American small business counselors at SCORE. One in 12 businesses is a franchise, across 75 industries and numerous subfields among them. Just a few of the well-known franchises are Krispy Kreme, Burger King, McDonald’s, Taco Bell, Baskin Robbins, Ben & Jerry’s, The Body Shop, and Motel 6.

Franchises exist worldwide. The European Franchise Federation estimates that 8500 distinct franchise brands are operating in the European Union, compared to about 2500 U.S. brands (2009). The franchise industry is particularly strong in the United Kingdom, with the number of franchise units increasing by 44% over the last decade. Franchising accounts for 10.8 billion annually in sales. The personality type of the successful franchisee is that of a person somewhere between an entrepreneur and an employee. The hard work and drive associated with the entrepreneur are still needed for a successful franchise, but the typical franchisee neither needs, nor typically has, the vision and constant pursuit of new ideas that are typical of most entrepreneurs.

Excerpted from “Raising Entrepreneurial Capital,” by Vinturella and Erickson.

Business Strategy Planning Advice

The following is excerpted from “Tips for Better Strategic Planning,” By Erica Olsen. It is part of the Strategic Planning Kit For Dummies Cheat Sheet, http://www.dummies.com/business/strategic-planning-kit-for-dummies-cheat-sheet/

Before you get too far into your strategic planning process, check out the following tips — your quick guide to getting the most out of your strategic planning process:

• Pull together a diverse, yet appropriate group of people to make up your planning team. Diversity leads to a better strategy. Bring together a small core team — between six and ten people — of leaders and managers who represent every area of the company.

• Allow time for big-picture, strategic thinking. People tend to try to squeeze strategic planning discussions in between putting out fires and going on much needed vacations. But to create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking (including taking your team off-site).

• Get full commitment from key people in your organization. You can’t do it alone. If your team doesn’t buy in to the planning process and the resulting strategic plan, you’re dead in the water. Encourage the key people to interact with your customers about their perception of your future and bring those views to the table.

• Allow for open and free discussion regardless of each person’s position within the organization. (This tip includes you.) Don’t lead the planning sessions. Hire an outside facilitator, someone who doesn’t have any stake in your success, which can free up the conversation. Encourage active participation, but don’t let any one person dominate the session.

• Think about execution before you start. It doesn’t matter how good the plan is if it isn’t executed. Implementation is the phase that turns strategies and plans into actions in order to accomplish strategic objectives and goals. The critical actions move a strategic plan from a document that sits on the shelf to actions that drive business growth.

• Use a facilitator, if your budget allows. Hire a trained professional who has no emotional investment in the outcome of the plan. An impartial third party can concentrate on the process instead of the end result and can ask the tough questions that others may fear to ask.

• Make your plan actionable. To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, account abilities, and specific deadlines. And everyone must understand the plan and his individual role in it.

• Don’t write your plan in stone. Good strategic plans are fluid, not rigid and unbending. They allow you to adapt to changes in the marketplace. Don’t be afraid to change your plan as necessary.

• Clearly articulate next steps after every session. Before closing the strategic planning session, clearly explain what comes next and who’s responsible for what. When you walk out of the room, everyone must fully understand what he’s responsible for and when to meet deadlines.

• Make strategy a habit, not just a retreat. Review the strategic plan for performance achievement no less than quarterly and as often as monthly or weekly. Focus on accountability for results and have clear and compelling consequences for unapproved missed deadlines.

• Check out examples. Although you can’t borrow someone else’s strategy, you can find inspiration and ideas from the examples of others. Here is one website with a catalog of example strategic plans by industry: OnStrategy, http://onstrategyhq.com/samples/ . Check it out for quick access to ideas.