Flock Free Nation

No nonsense information on small business.

Apr 28, 2011 - 3 minute read - Comments - websites

Google Offers Free Websites To Canadian Businesses

Google has teamed up with a number of sponsors, including the Royal Bank, to offer a free website to any Canadian business. In the video below, Kevin O’Leary introduces the program.

A domain name is the “www” address you are familiar with; ie. www.businessplangenius.ca. The Get Your Business Online (GYBO) program includes a .ca domain free for the first year. This is approximately a $10 value. You will own your domain and you are free to transfer it to another service if you want after 60 days. Basically, you are not locked into anything.

Websites are stored on computers called servers that are connected to the internet. This is referred to as “hosting”. Every website must have a host. The typical cost for hosting a basic website is $7-$10/month. Under the GYBO program, a company called Yola, is offering free hosting.

Yola also provides a templates that you can uses to build your website. I haven’t used the templates but from the material I’ve read, it seems like they would be very easy to use. If you can use Microsoft Word, you can use these templates. There is no programming required. There are only 6 steps to get your website up and running under the GYBO program:

  1. Select your .ca web address
  2. Select your category - This is to match your business with templates that are most appropriate for your needs.
  3. Create content - This is the information that will be on your website
  4. Choose a style - This is where you pick the template you like best.
  5. Customize your site - This is where you would change colours, add photographs, etc.
  6. Publish your website to the internet - This just takes the click of a single button.

If you are wondering “What’s in it for Google?”, they are hoping to get more businesses on line because it will lead to more people using Google to search for them. Google can sell more ads based on the increased search traffic. Yola is hoping that you’ll upgrade and use some of their paid services. The GYBO program is a marketing effort for these companies.

Having said that, if you do not have a website for your business you’d have to be crazy not to take advantage of this offer. You’d be hard pressed to find a simpler way to get your website online. The websites I’ve seen that have been built with these templates vary in quality but that is due more to the taste of the business owner than any deficiency in the templates.

It’s 2011. If you don’t at least have a website to tell people what you sell, where your business is and what your hours of operation are, you don’t exist. I haven’t used the yellow pages in at least a year. If you are not online, I won’t know about you and neither will many other people. This is a great opportunity. Take advantage of it.

Apr 27, 2011 - 3 minute read - Comments - business planning

Business Plan Templates, Samples & Outlines

Many people’s first instinct when starting the business planning process is to find a template, outline or sample plan that they can copy to create their own business plan. A quick Google search will show that there are thousands of these templates on the internet. Like anything on the internet, there is a large variation in the quality of these plans. So how do you know which one to use as a guide? With the large volume of templates out there, it is obviously impossible for me to review them all but here are some guidelines you can follow to make sure that you wind up with a better plan in the end.

  1. If you’ve chosen to use a template, you will need to learn about functional business areas like marketing and finance. You will need to write intelligent, educated content in each section of the plan and this is impossible without an understanding of each functional area. This is actually the biggest benefit of using a template and writing the plan yourself. It will get you to learn and think about all areas of your business, which will leave you better prepared once you actually begin operations.

  2. Don’t follow the template exactly as it is written. Whoever created the template did so for his or her business, not yours. Use the template to see what types of things should be included in your business plan but there will be sections that you should add or delete to suit your circumstances.

  3. Look at a sample plan for the outline only and ignore the content. The content may not apply to your business. It may be poorly written. If you blindly copy this text into your own plan it might not make sense in the context of your business and your banker will think that you don’t know what you are doing.

  4. Most business plan templates are Word documents, which don’t include pro forma financial statements. There are Excel spreadsheet financial models available on the internet but my comments about quality and appropriateness apply to these as well. One particular thing to pay attention to is the country the spreadsheet was designed for. Accounting is treated a bit differently from country to country so I wouldn’t use U.S. pro forma statements for a Canadian business plan, for example. Excel sheets will be more difficult to modify to your own particular situation but again, you will learn a lot things that will be useful later on.

The bottom line is that a business plan template can be useful in guiding you through the planning process but it is no substitute for understanding business concepts. You will need to know what you are doing if you are going to have a successful outcome. If you want to have a look at one, download this free general business plan template.

Apr 26, 2011 - 2 minute read - Comments - business model

Evaluate Your Business Idea

People come up with ideas for new businesses every day. How does one judge whether an idea has merit or not? Should the business be pursued or should the idea be tossed on the scrap heap of bad ideas? Here is a process you can follow to find out.

A feasibility study is used to test a business concept. It takes into account the strengths, weakness, opportunities and threats (SWOT) of the proposed business’s environment and the resources it has at hand to try to evaluate the business’s chances of success.

The first step is to come up with a hypothetical business model that you can test based on the research and analysis you conduct in the feasibility study. I recommend following the Business Model Generation method.

Next, you would conduct research designed to inform the analysis needed to test the assumptions you made in the business model. This may involve talking to potential customers, gathering information on your market and competitors, and getting quotes on all costs involved, among other things.

Once you have information in hand, you can start your analysis. In general, for a feasibility study, I would conduct the following analysis:

Environmental Analysis

  • trend analysis
  • industry analysis
  • internal analysis (an assessment of your skills vs what the business requires)
  • market profile analysis

Financial Analysis

  • analysis of similar firms in the industry
  • projected market share
  • break even analysis
  • proforma analysis
  • ROI projections
  • margins

If you complete the analysis described above, you should be in a good position to make a decision about whether or not to proceed.

If you decide to proceed, you would then create a business plan to describe the day to day operations of your business. Much of the analysis done in the feasibility study stage will be brought into the business plan so it should be relatively easy to create.

A feasibility study is a lot of work and it is difficult to do well, but it is a step than should not be skipped for a business with a new business model. The risks are just too high. It’s better to find out that a business doesn’t work in the feasibility study stage rather than after you’ve invested your hard earned money. While “No, don’t do this” might not be what you want to hear, consider it a set back. There are plenty more ideas in the world. Take what you’ve learned, pick another idea, and take another shot at it.

Apr 25, 2011 - 2 minute read - Comments - business model

What Is A Business Model?

The book, Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, written by Alexander Osterwalder and & Yves Pigneur defines the term business model as:

A business model describes the rationale of how an organization, creates, delivers, and captures value.

This is a very good definition, however I think it is important to understand the difference between a business model and a business plan.

A business organizes its assets and activities into a system that it uses to deliver value to the customer. This system may vary widely from business to business depending on the industry it is in and the approach it is taking. For example, a restaurant has a different business model that a tire shop. This is easy to see. Amazon has a different business model than your local retail seller of books. This might be more difficult to see as they both sell books.

To help explain this difference, I’ve included a graphic from the above mentioned book that nicely organizes a business model into separate areas.

Business Model Canvas

When you look at categories like cost structure, channels, and key activities it becomes clearer how Amazon is different than your local bricks and mortar retail book seller.

Note that the business model gives a thumbnail sketch of how the business will be organized and what it will be doing. It does not provide a plan for how this system will work or how it will be implemented. That’s where the business plan comes in.

What does all this mean for you, the person wanting to start a small business? If you are starting with a business model that has been existence for while and other people are successfully running businesses using it, you can proceed to the business planning stage. If you are starting a business with a business model that is significantly different that what has been tried before or if a particular business model has a short rack record, you should spend time developing your business model. This will often involve conducting a feasibility study to test your business concept.

For 80%-90% of you out there who are looking to start small businesses, a proven business model exists for what you are doing and you can proceed to the business planning stage. The rest of you have a longer road to travel. For more information on business models, check out the Business Model Generation website.

Apr 21, 2011 - 2 minute read - Comments - business planning

What Is A Business Plan?

The Government of Canada’s Business Services For Entrepreneurs website defines a business plan as:

“A business plan is a written document that describes your business, its objectives and strategies, the market you are targeting and the financial forecast for your business. It will assist in setting realistic and timely goals, help secure external funding, help measure your success, clarify operational requirements and establish reasonable financial forecasts. Preparing your plan will help you focus on how your new business will need to operate to give it the best chance for success.”

This is a good definition of what a business plan is but I think it is important to describe what a business plan is not:

  • The business plan is not where you come up with your business idea. This should be completed before you get to the business planning stage.
  • It is not for developing a business model. A business model is a system for making money. Some businesses have straightforward business models that have stood the test of time. Some businesses have business models that need to be tested because they are blazing a new trail. Your business model should be settled before you get to the business planning stage.
  • It is not a feasibility study. A feasibility study is used to test a business idea to see whether it stands a good chance of becoming a successful business. There is some overlap between a business plan and a feasibility study but studying feasibility is an investigation and not a plan. Lessons learned in the feasibility stage can be applied to the business planning stage.

For an idea that is not unique and has proven business models built around it in other neighbourhoods or cities, a feasibility study may not be necessary. It’s important to understand where you are in the process of starting a business. Trying to complete the process out of order or trying to skip steps will limit your chance at success.

Apr 20, 2011 - 2 minute read - Comments - entrepreneurship

How much Debt to Take? A Golf Analogy

A common topic of discussion with my clients is how much debt is the right amount. This is a big question. Not enough debt can restrict your growth and too much debt can destroy your business. How can you tell if you have too much or too little debt? Since it’s the start of golf season, how about a golf analogy?

The new Taylor Made R11 Driver. Like a loan, capable of delivering breathtaking power and massive destruction.

A loan is like a high tech, long distance driver to a business. When used properly, it can add distance to your game and lower your score. It can’t, by itself turn you into a better golfer. In fact, a top tier driver in the hands of a wild golfer will increase scores because the off-center hits will result in even wilder misses.

In a business, if you have solid revenues and have good control over your costs, debt can be a great way to make your investment work for you. The increased power the loan provides will greatly benefit your bottom line. If you have fluctuating revenues and are subject to wide fluctuations in costs, the increased power of a loan can wreck you if you can’t make your payments.

The one point where this analogy breaks down is the role of the banks. Yes, they are selling you the loan (driver), but they aren’t overly concerned with your score. It’s more like they are renting you golf balls. As long as you return them at the end of the round (interest and principal payments), they don’t care if you shoot 70 or 105. Hopefully this analogy sheds a bit of light on how your debt structure affects your business. Until next time, keep it in the short grass!