Invest In Yourself – Your Career, Future Income Stream, Education And Training

by: Maxwell Z. Rubin

The advice often given to young couples starting off in life is “Not to buy what you cannot afford”. The same basic advice should be heeded by many. If you cannot afford it- then do not buy the item. But what of investing in your own future in terms of an investment in your personal education or training as well as investments in your own personal career. Is this not getting ahead in life? Is this not money well spent? Even if you have to borrow and go into debt is this not money well spent?

If at the end of the day , year or decade you will be much further ahead in position , salary as well as benefits in addition to “job” and “personal” satisfaction is this not money, time and effort well spent and allocated. ? Indeed it is and can well be.

In the case of your education a dollar borrowed now will result in better jobs- that you will most likely find more challenging and enjoyable , and have a lot more financial reward than a job on the status scale – say as a bus driver or a technician doing oil jobs at your local Wal-Mart. In the case of a vehicle or car loan it may be a godsend. If your vehicle is not reliable – then how can you show up on time, keep your job without an image and reputation of reliability? Not only do you want to keep your employment and income associated with the job but also the job references from your employment superiors for use with other employers for better positions and pay, or for promotion within your present organization. You may even run into a case of promotion within your present firm to another branch office or plant. Not having reliable transport may limit your promotion offerings and flexibility. In addition, if you take out a loan to purchase that vehicle, you may well have upscaled and upgraded your car or SUV, from the models that you most likely would have purchased. By doing so, and driving a higher grade auto model, you may well appear as a more established, senior, more experienced and established employee as well as individual. Fortunately or unfortunately in life most comes down to appearances and perceptions.

There may be a much better and / or better paying job but its way across town, or in an area not served by the bus transit system. Or it may be the case that there is bus service - but if devours a good two to three hours a day of travel time. Good bye to your personal social life. You may have all the money in the world – the wealth of Bill Gates Himself and yet no time or energy to enjoy it. So much for all that pay of that new wonderful job.

A real step foreword as they say. It is always a case of reward versus cost or cost versus benefit. It is a case by case analysis.

In addition you should think of additional or add on costs. Do not stretch yourself too thin – financially. A course at university may not be offered in your calendar year – you will have to complete your schooling fully at a later date than expected. A course may be full – ditto for time delay. Or you may even have to repeat a course or change plans along the way necessitating longer time duration of studies. Leave a buffer of funding both for yourself and as well with the agency that provided the loan – be at bank, savings and loan, credit union or even parents or relatives. Don’t break the bank so to speak at the first step. The same analysis of benefit versus costs prevails in the car / transport / job scenario situation. Many people will drive across town for a bargain to save a dollar and spend $ 10 on gas costs in the process. Incorporate the price of gas into your final net salary not as an aside.

Lastly and most importantly – always pay your bills. Never take on more than you can chew, or in this case afford. Before making that commitment for a loan or undertaking always evaluate carefully before signing on the bottom line. It’s not only a matter of convenience. Your credibility itself is on the line, in addition to your personal honor and integrity and reputation. Pay your bills on time – even earlier than required. This applies to all loans – whether they are for rent, mortgage, utility bills, bank loans, charge card payments or student loans. If you cannot pay in full, then at least pay a bit above the minimum payment. If you are really stuck then contact the lender. Explain the situation honestly. Make a commitment and follow through. Remember the whole point of the exercise was your self improvement – an investment in yourself. To not take the exercise seriously is to shortchange yourself and your future opportunities as well as income stream in the future. To borrow for yourself and personal gain make prudent sense.

Tips for Prescribing a Future for Your Business

by: Adele Sommers

Are you wondering what the future holds for your business? Whether you want to predict your future or prescribe an outcome of your choosing, you'll have plenty of company!

Throughout history, we humans have tried many ways to predict the future, from reading palms to stargazing. Today, we refer to these as descriptive methods when we attempt to describe objectively what the future will be or could be.

On the other hand, prescriptive methods focus on determining what the future should be. These techniques can help us clarify our preferences and values so we can create a vision of what we would like to see in our lives, businesses, or communities.

Once we understand what we would like the future to represent, we're better able to take the actions required to implement it. Ideally, that future will align with our passions, gifts, and what we (or our companies) can really be the best at doing. This article suggests a two-stage process for achieving that goal.

First, Identify Your "Hedgehog Concept"

So, what can you be the best in the world (or at least in your community) at doing? This thought-provoking reflection is one of many from Jim Collins' "Good to Great: Why Some Companies Make the Leap...and Others Don't."

Collins' team examined 1,435 companies to see which ones made substantial gains in profitability and sustained those improvements over 15 years or more. Since the 1970s, only 11 companies had risen from mediocrity to greatness and stayed there -- topping many other prosperous firms that lacked the same staying power.

Of eight characteristics these companies shared, all held an unshakable adherence to becoming the best in the world at whatever they did. Each company committed to doing only those things and nothing else. That sometimes meant dropping their core businesses to pursue other things at which they could become the best in the world.

Collins and his team coined the term "hedgehog concept" to reflect a single-minded determination and focus that, similar to that of the hedgehog animal, attempts to do only one thing really well, such as curl up and roll. A hedgehog concept actually represents the intersection of three areas:

1) What you're most passionate about
2) An understanding of what you could be the best at doing, and
3) A metric that drives your economic engine and helps you measure results.

Keep in mind that according to Collins, this concept is not a goal, strategy, or plan, but an understanding of what you can and can't be the best at doing. Until you develop your hedgehog concept, you won't know your true vision, mission, or purpose.

Next, Define Your "Business Success Criteria"

Do you have a crystal clear idea of the types of business undertakings that align with your gifts, talents, passions, and strengths? In that same context, have you thought about whether your business can be the very best in the world at doing those things?

If the answers are "yes," you are in an excellent position to choose the ventures that can give you the greatest satisfaction and results.

If you're not yet totally clear about the answers to these questions, developing a set of "business success criteria" can enable you to select worthwhile endeavors with much deeper insight, and thus set the conditions for successfully pursuing them. A hedgehog concept thereby represents part of the formula you can devise to identify and choose among your very best options.

Why is this so important? It's not uncommon for people to wander into businesses, projects, and professions opportunistically, which means that they often select the next available and convenient thing that comes along. At times, this may be necessary for financial reasons. But unless we understand our underlying success criteria, we might not recognize the options that truly fuel and inspire us -- those that are best suited to our passions and strengths.

Some of your criteria could be practical considerations, and others more lofty ideals. But all of your criteria will be essential to achieving balance, fulfillment, prosperity, and higher contribution in your life.

In conclusion, a set of carefully crafted success criteria fueled by a potent hedgehog concept provides an unbeatable strategic advantage, and an excellent direction-finder for prescribing your future!

My Very First Board of Directors Meeting...

by: Nick Siegel

I could make up a terrific story about this, but I won't lie - I had avoided (as in postponed, side-stepped, procrastinated) having a board of directors until now. Frankly, I had visions of having a group of old, cranky, humorless men telling me what to do.

Of course I was just being lazy, too. I would rather be out making products and building a business than sitting around trying to make sense out of Excel files, charts and graphs, and essentially being bored to death in the process.

Our company, however, has reached the point where "proper governance" is important...even necessary. The "let's do it because we all think it's a really good idea" mentality had to go. We really needed to be able to show that all of our shareholders were represented in our decision making - and represented fairly.

So I asked my business mentor and close friend, who knows and understands our industry very well, to be the first member of the board of directors. Now let's be clear - I didn't ask him because he's my "friend." That would have shown very poor judgment, and frankly, friends don't always make the best business advisors. I asked him because he's already the one person who advises me on all "board-type" matters, anyway!

So imagine this: I felt like a "big grown-up boy" in long pants, carrying my briefcase filled with notes, reports, Excel printouts, etc., to my first board of directors meeting on Friday, February 15, 2008, at 2 PM ET.

If you are picturing a large dark paneled room with a long table, think again. Outside our "boardroom" were chickens, squirrels, birds, and other creatures - large and small, wild and domesticated. Inside the "boardroom" (besides the board members) were a dog (a.k.a. The Wolf), two cats (a.k.a. Puffy and Fluffy), and five children. Yes, we were in my friend's home, gathered around his kitchen table.

Maybe someday we will meet in that dark-paneled room with a long table. But I don't care how big my business gets - I hope we can continue to meet with the same "family feeling." There was a certain calmness, almost a serenity, about the entire meeting. There was nothing stuffy or even formal, although we did follow the rules of a proper meeting.

So my first board of directors meeting started with a brief lesson about what exactly happens at board meetings! My friend and mentor gave a simple, five-minute explanation of what board meetings were all about...and in the process, he completely changed my preconceived ideas. That's what I really want to share today.

What Do You Think Is Supposed To Happen At Board Meetings? - Company planning strategy?

- Hiring strategy?

- Financial planning?

No, no, and no. Those are the things that I THOUGHT were supposed to happen at a board meeting, but was I ever wrong. The things listed above are the territory covered by company management...not the board of directors.

The board of directors has exactly one responsibility, and that responsibility is...

GOVERNANCE

Just like a sovereign nation, each company has what they call "articles of incorporation." These "articles" are actually the laws - or rules - that the management of the company must abide by.

So the whole purpose of the board of directors is just to make sure those laws are followed. The point is for the board to make sure the decisions that are made in the day-to-day operation of the company are really in the best financial interest of the shareholders.

Of course, not ALL of the decisions that are made by management are the right decisions - anyone can be wrong, it's inevitable. But the decisions have to be made within the laws laid down in the articles of incorporation. They can't be sneaky decisions, they can't have malicious undertones, and they can't be decisions that line the pockets of management at the expense of shareholders.

Here is just one example of the type of responsibility shouldered by the board of directors:

The board does not decide who is hired to fill a position. The board simply "empowers the management" to pursue that hire. It's still management's job to make the final decision about who is hired to fill the position. The board only acknowledges that they understand why the position has been created and filled.

The board of directors GOVERNS. It does not strategize.

So in the end, I didn't need all those spreadsheet printouts and detailed notes. What I did need was exactly what I got - a lesson in how to think about shareholder value, while simultaneously running the company.

What is in a Franchise UFOC?

by: Bob Richman

There are 4 parts to a UFOC:

* Cover Page
* Table of Contents
* Items 1-23
* Exhibits

The format for each of these sections is very specific and covers the following:

Cover Page The Cover Page identifies the franchise business, including the name under which the franchisee would operate and what type of business it is. It also includes the amounts of the initial franchise fee. In addition, any additional risk factors are included on the cover in all capital letters. Risk factors that may be included pertain mostly to which state is governing the franchise agreement and where any litigation is permitted to be filed and heard.

Table of Contents The Table of Contents contains the specific 23 items listed below, as well as the exhibits, in a standard format.

Items 1-23 Item 1: The Franchisor, Its Predecessors, and Affiliates This section gives you a background on the Franchisor, including anyone he/she has purchased the franchise from, and any affiliates, meaning anyone else who has a controlling interest in the franchise. Do your research on these representatives, including a credit check if possible. You're quite possibly investing your life savings with these people and knowing any other businesses in which they have been involved and how well they manage financial aspects is important.

Item 2: Business Experience This section gives you a background on the officers and directors of the franchise for the past five years. Similar to the information you will review on the Franchisor itself, you want to carefully review the expertise these people bring to the table. These are the people you will be working with and who will contribute greatly to the success of your franchise. You should get to know them as well as you can.

Item 3: Litigation Any history of litigation, including cases terminated by settlement, must be disclosed in this section. Any Franchisor who is under some kind of restrictive injunction is one to stay away from. Additionally, if a franchisor or any officer has a criminal history or any litigation pending that may affect his or her ability to maintain a franchise then this opportunity is not a worthwhile risk.

Item 4: Bankruptcy The bankruptcy disclosure requires that they tell you up front about any bankruptcy in the last 10 years concerning, "the franchisor, its affiliate, its predecessor, officers, or general partner". Entrepreneurs often have several failures before they are successful. Learning from failed business is not the experience you want to have, which is why you are considering a franchise. This doesn't always mean that having a bankruptcy in the disclosure is a sure prediction of a bankruptcy in the future, but you want to review the circumstances of the bankruptcy carefully, including the amount of time that has lapsed since that bankruptcy. You typically don't want to give your money to someone with a proven track record of not being able to manage it.

Item 5: Initial Franchise Fee The initial franchise fee is the fee you pay to purchase the right to operate as a franchise. This does not include all of the other fees that may be required to get started or continue operation. The important thing to know about the initial franchise fee is exactly what you are getting for those dollars. Knowing how they came up with that number is important. A large initial franchise fee does not equate to a larger earning or a better investment. Consider this fee in addition to the Other Fees (Item 6) and Initial Investment (Item 7) before concluding what it will actually cost to open a franchise.

Item 6: Other Fees Other fees include any other monies you will be required to pay to the franchisor, including royalties, advertising fees, service fees, training fees, or any other ongoing or one-time fees that you as a franchisee will be expected to pay directly to the franchisor.

Item 7: Initial Investment This is the key item in terms of figuring out what is will cost you to get a franchise up and running. This section is laid out as a table, and includes the estimated costs for training, equipment, opening, inventory and other costs associated with starting your franchise. For each item in the list, you are given the amount, the method of payment, when it is due and to whom the payment is to be made. Review this information carefully. Speak with other franchisees and see if the estimated costs were realistic. Expect that you will need more for unexpected expenses. Remember that most businesses are not profitable for at least a year, so include the amount of money it would take you and your family to survive for a year without income.

Item 8: Restrictions on Sources of Products and Services If the franchisor requires you to purchase or lease from designated sources, investigate further. Sometimes the purchase restrictions are because the franchise has negotiated a lower price for certain goods in return for guaranteed orders. However, sometimes the cost of the supplies is not competitive and the franchisor makes a bit of money from the procurement of supplies. This makes the franchise more expensive to run, even if the startup costs look attractive. If the costs are reasonable, the restrictions are not a big issue. Again, talk to existing franchisees to see if they feel these restrictions are reasonable and whether or not they are satisfied they are receiving their money's worth.

Item 9: Franchisee's Obligations Your obligations as a franchisee can be laid out in various agreements, including but not limited to the franchise agreement. This section explains what your obligations are and exactly where in the legal documentation you can find the information governing your obligations. This is an important section for you to review carefully, as they define your contractual obligations and if you breech these obligations your franchise can be terminated. Talk to current franchisees and see whether meeting these obligations has presented any difficulty. If the obligations seem unreasonable, move on.

Item 10: Financing Sometimes the financing required to start-up a franchise comes from the franchisor him/herself. As with any financial contract, review the conditions and be sure that they are competitive and make sense. Have an accountant or banking representative review the terms and give an opinion. Having a credit check would, again, be handy here.

Item 11: Franchisor's Obligations Just as the UFOC lays out your obligations as a franchisee, the obligations of the franchisor must be clearly disclosed in this section. You are putting your financial future into the hands of the franchise that you purchase, at least in part. Be sure you understand exactly what you are getting for what you are paying. You may want to approach this section in a different manner than the others...perhaps backward. Rather than reading what they will provide, begin by making a list of what you think you will need to be successful. Determine what kind of training you will need and see whether they provide it, when it will be offered, what kind of training it is, and whether or not it meets your needs. What kind of ongoing support or documentation do they include? Also determine what you would need after you have opened the franchise and see whether those items are included in their list of obligations. If they are missing things that you think you will need to be successful, ask to have those things added to the franchise agreement. Verbal promises from salespeople are not sufficient - promised items should be added to this section.

Item 12: Territory Opening a franchise just to see another franchise open up a half mile down the road would be enough to make anyone crazy. The territory section of the UFOC is designed to lay out exactly what rights you have to any territory. Having the right to an "exclusive area" cuts down on the competition, at least from within your own franchise. Unfortunately, not all franchisees are alike. Some will take full advantage of their area and develop the market to its fullest. Others will assume that the lack of competition in their immediate area means they have a right to the business and therefore don't work quite as hard to develop that area. There are many other situations in which an exclusive area causes issues for a franchisor, and most will not grant them. Some will grant an exclusive area only for a specified amount of time or only as long as a certain level of achievement is reached by the franchisee. Understanding what options the franchise offers is very important.

Item 13: Trademarks This section discloses any trademarks, service mark, service name or logotype used in the franchise business and whether or not that trademark or service mark are registered with the US Patent Office. Using a trademark symbol (™) is not the same thing as having a registered trademark. The registered trademark (®) means a certificate of registration has been granted to the franchisor. A trademark registered in the Supplemental Register does not have the same legal rights and there should be a statement in the Trademarks section disclosing this information.

Item 14: Patents, Copyrights, and Proprietary Information This section is important to you only if patents are important to the franchise. If so, get a copy of the patent from the U.S. Patent Office and review the status of the patent. Be familiar with any copyrighted or proprietary information outlined in the UFOC, as the franchisor has a right to modify or prohibit use of anything patented, copyrighted, or proprietary information disclosed in the UFOC.

Item 15: Obligation to Participate in and the Actual Operation of the Franchise Business This section outlines any requirements for the franchisee to personally be involved in the operation of the franchise. If the franchise does not require the franchisee to run the business him or herself, then there must be a statement outlining whether or not a manager running the day-to-day operations of the franchise in place of the owner must complete the franchisor's training program and/or own an equity share of the business, and any limitations placed on the manager (such as being approved by the franchise).

Item 16: Restrictions on What the Franchisee May Sell Restrictions on what you may sell will affect those franchisees who want to operate an expandable business while they own the franchise. This section is also important if you are limited to selling goods or services that won't make you enough return.

Item 17: Renewal, Termination, Transfer, and Dispute Resolution This section is one of the most important in the entire document, and is presented in a table format for easy browsing. The best contract is one stating that as long as you do not breech your contract you can renew your franchise agreement, forever. Contracts that place a limit on your possibility to renew solely at the discretion of the franchisor are bad. Also pay close attention to extensive repairs or decoration that will required as a condition of renewal. The amount of money expected to be spent should be reasonable and there should be some kind of formula so that costs are not incurred all in the same year. Additionally, the refurbishment should keep you industry competitive.

There are many types of transfers. Transferring among business entities, such as from a sole proprietorship into a corporation, should definitely be allowed. A good agreement will also allow your franchise to be transferred to your heirs. If this is not allowed and you're still interested in purchasing the franchise, try to make some provision for the repurchase of your franchise by the franchisor.

This section also outlines the causes for termination of the franchise agreement, states whether the franchise can be sold and who has the right of first refusal (your own blood relatives should not, ideally, come after the franchisor on first rights), and delineates your right to arbitration. Essentially, the more rights you have to control the renewal and transfer of your franchise, the more rights you have for the continuation of your business and the better the agreement. Make sure your franchise attorney reviews these rights as well as your rights to litigation (or requirement to use arbitration). Any additional risks for litigation will also be on the cover page, remember.

Item 18: Public Figures This section requires the disclosure of any public figures the franchise uses as a spokesperson, how much they were paid, and how much control they have in the business (if any). Find out how this arrangement relates to you, whether you can use that figure in personal appearances or advertising, how much it would cost and how frequently you would be allowed to do so.

Item 19: Earnings Claims It is very tricky for a franchisor to project, estimate, or in any way forecast financial sales. There are so many variables in play for an individual franchise that it would be mostly guesswork and optimism to project for a prospective franchisee how much money they will make with their business. Any claims made by the franchisor to this effect must be substantiated, so rarely will you see any earning claims included in a UFOC. The best way to get an idea of what to expect for earnings is to talk to existing franchisees. Find out how long they've been in business, when the business turned profitable, and what their average profits have been. Remember that each business is unique and that each franchisee does not run a business equally well. Speak to several franchisees to get a clearer picture of a range that you might be able to expect.

Item 20: List of Outlets All of the existing franchise locations, along with the franchisee's contact information, is listed in this section. This is the pot of gold, right here. Contacting franchisees with questions about their relationship to the franchisor, their ability to meet their contractual obligations, their general earnings, and how realistic the start-up projections are is the best bit of research and review you can possibly do before purchasing your franchise. Prepare your questions and schedule time with franchees in advance; this one is important.

Item 21: Financial Statements This section points you to the exhibits containing the audited financial statements of the franchisor for the last three years. Take these statements to a qualified accountant for review. The financial status of the franchisor is a track record, showing you not only the ability of the franchisor to run the business, but also the likelihood of success or failure.

Item 22: Contracts All contracts or agreements a franchisee will need to sign must be attached to the UFOC. This includes the Franchise Agreement, purchase agreements, lease agreements, and others.

Item 23: Receipt This document is a receipt of acknowledgment of the UFOC. This has to be provided as the last page of the document for the franchisee to acknowledge that they have received it. This is only important because no monies can legally be exchanged until 10 days after the receipt of the UFOC (the "cooling off" period provided for by law).

Exhibits Any documents that have been identified in the UFOC for the franchise to review or sign must be included as an Exhibit. The exhibits will include copies of such things as the financial statements, Franchise Agreement, leases, or Loan Agreements.

How To Write A Successful Business Plan

by: Jason Kay

Whether you are planning to start a brand-new business, expand an existing company, or get financing for a business venture, you will need to write a business plan. A business plan not only lends your business a sense of credibility, but also helps you to cover all your bases, increasing your chances of success.

Although writing a business plan can be a lengthy, intimidating project, it is not necessarily difficult. Here is an overview of how to write a successful business plan.

What to Include in Your Business Plan

Your business plan needs to demonstrate that you have thoroughly considered all aspects of running your business. To that end, the standard business plan has nine major sections, covering everything from your business’s mission statement to a detailed financial analysis.

Executive Summary

The first – and most important – section of your business plan is the executive summary. This section is so important that it should literally be the first thing the reader sees – even before the table of contents! However, it should also be written last, as you’ll have a better understanding of the overall message of your business plan after you’ve researched and written the other sections.

One of the most important parts of the executive summary is the mission statement. The mission statement is only three or four sentences long, but it should pack the most punch out of everything else in your business plan: Those four sentences are responsible for not only defining your business, but also capturing the interest of your reader.

The rest of your executive summary should fill in the important details that the mission statement glosses over. For instance, your executive summary should include a short history of the business, including founder profiles and start date; a current snapshot, listing locations, numbers of employees, and products or services offered; and a summary of future plans and goals.

This section is a candidate for a bulleted format, which allows you to list main points in a manner that is easy to scan. Avoid using too much detail – remember, this section is a summary. A page or two is usually sufficient for an executive summary.

Market Analysis

The next section of your business plan focuses on market analysis. In order to show that your business has a reasonable chance for success, you will need to thoroughly research the industry and the market you intend to sell to. No bank or investor is going to back a doomed venture, so this section is sure to fall under especially close scrutiny if you are looking for financing.

Your market analysis should describe your industry, including the size, growth rate, and trends that could affect the industry. This section should also describe your target market – that is, the type or group of customers that your company intends to serve. The description of your target market should include detail such as:

• Distinguishing characteristics
• The needs your company or product line will meet
• What media and/or marketing methods you’ll use to reach them
• What percentage of your target market you expect to be able to wrest away from your competitors

In addition, your market analysis should include the results of any market tests you have done, and an analysis of the strengths and weaknesses of your competitors.

Company Description

After your market analysis, your business plan will need to include a description of your company. This section should describe:

• The nature of your business
• The needs of the market
• How your business will meet these needs
• Your target market, including specific individuals and/or organizations
• The factors that set you apart from your competition and make you likely to succeed

Although some of these things overlap with the previous section, they are still necessary parts of your company description. Each section of your business plan should have the ability to stand on its own if need be. In other words, the company description should thoroughly describe your company, even if certain aspects are covered in other sections.

Organization and Management

Once you have described the nature and purpose of your company, you will need to explain your staff setup. This section should include:

• The division of labor – how company processes are divided among the staff
• The management hierarchy
• Profiles of the company’s owner(s), management personnel, and the Board of Directors
• Employee incentives, such as salary, benefits packages, and bonuses

This goal of this section is to demonstrate not only good organization within the company, but also the ability to create loyalty in your employees. Long-term employees minimize human resource costs and increase a business’s chances for success, so banks and investors will want to see that you have an effective system in place for maintaining your staff.

Marketing and Sales Management

The purpose of the marketing and sales section of your business plan is to outline your strategies for marketing your products or services. This section also plans for company growth by describing how the growth could take place.

The section should describe your company’s:

• Marketing methods
• Distributions methods
• Type of sales force
• Sales activities
• Growth strategies

Product or Services

Following the marketing section of your business plan, you will need a section focusing on the product or services your business offers. This is more than a simple description of your product or services, though. You will also need to include:

• The specific benefits your product or service offers customers
• The specific needs of the market, and how your product will meet them
• The advantages your product has over your competitors
• Any copyright, trade secret, or patent information pertaining to your product
• Where any new products or services are in the research and development process
• Current industry research that you could use in the development of products and services

Funding Request

Only once you have described your business from head to toe are you ready to detail your funding needs. This section should include everything a bank or investor needs in order to understand what type of funding you want:

• How much money you need now
• How much money you think you will need over the next five years
• How the money you borrow will be used
• How long you will need funding
• What type of funding you want (i.e. loans, investors, etc.)
• Any other terms you want the funding arrangement to include

Financials

The financials section in your business plan supports your request for outside funding. This section provides an analysis of your company’s prospective financial success. The section also details your company’s financial track record for the past three to five years, unless you are seeking financing for a startup business.

The financials section should include:

• Company income statements for prior years
• Balance sheets for prior years
• Cash flow statements for prior years
• Forecasted company income statements
• Forecasted balance sheets
• Forecasted cash flow statements
• Projections for the next five years – every month or quarter for the first year, with longer intervals for the remaining years
• Collateral you can use to secure a loan

The financials section is a great place to include visuals such as graphs, particularly if you predict a positive trend in your projected financials. A graph allows the reader to quickly take in this information, and may do a better job of encouraging a bank or investor to finance your business. However, be sure that the amount of financing you are requesting is in keeping with your projected financials – no matter how impressive your projections are, if you are asking for more money than is warranted, no bank or investor will give it to you.

Appendices

The appendix is the final section in your business plan. Essentially, this is where you put all of the information that doesn’t fit in the other eight sections, but that someone – particularly a bank or investor – might need to see.

For instance, the market analysis section of your business plan may list the results of market studies you have done as part of your market research. Rather than listing the details of the studies in that section, where they will appear cumbersome and detract from the flow of your business plan, you can provide this information in an appendix.

Other information that should be relegated to an appendix includes:

• Credit histories for both you and your business
• Letters of reference
• References that have bearing on your company and your product or service, such as magazines or books on the topic
• Company licenses and patents
• Copies of contracts, leases, and other legal documents
• Resumes of your top managers
• Names of business consultants, such as your accountant and attorney

Writing a Successful Business Plan

Despite the quantity of information contained in your business plan, it should be laid out in a format that is easy to read. Just like with any piece of business writing, it is important to craft your business plan with your intended audience in mind – and the bankers, investors, and other busy professionals who will read your business plan almost certainly won’t have time to read a tedious document with long-winded paragraphs and large blocks of text.

Business plans for startup companies and company expansions are typically between twenty to forty pages long, but formatting actually accounts for a lot of this length. A strong business plan uses bullet points throughout to break up long sections and highlight its main points. Visuals such as tables and charts are also used to quickly relay specific information, such as trends in sales and other financial information. These techniques ensure that the reader can skim the business plan quickly and efficiently.

Think of your audience as only having fifteen minutes to spend on each business plan that comes across their desks. In that fifteen minutes, you not only have to relay your most important points, but also convince the reader that your business venture merits a financial investment. Your best bet is a well-researched business plan, with an organized, easy-to-read format and clear, confident prose.

Superior Leader - Warren Buffet

by: Michael J. Spindler

Superior business leader and American investor Warren Buffett is often called “Oracle of Omaha” or the “Sage of Omaha” and philanthropist. (Wikipedia, 2007) Buffett is the CEO, and the biggest shareholder of the Berkshire Hathaway Company. Buffett’s has an estimated current net worth of approximately $52 billion in US funds. Forbes Magazine ranks Buffett the third richest person in the world in September 2007 behind Carlos Slim and Bill Gates.

Warren Buffett is known for his economical and plain lifestyle. Buffett still lives in the same Omaha, Nebraska house that he purchased in 1958 for $31,500 with a current value of $700,000. In 1989, Buffett spent $9.7 million of the Berkshire’s funds on a corporate jet. He jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs. (Wikipedia, 2007)

Warren Buffett decided to make a commitment to give his fortune to charity back in June 2006. Buffett’s charity donation is approximately $30 billion, which is the largest donation in the history of the United States. The donation was enough to more than double the size of the foundation with 83% of it going to the Bill and Melinda Gates Foundation. Buffett believed that his family had enough money to get started in life so Buffett decided to give his fortune to charity. Buffett’s annual salary in 2006 was only $100,000. In 2007, Buffett was listed among Time Magazine’s 100 Most Influential People in the World. (Wikipedia, 2007)

What makes Warren Buffett a good business leader? This is what everyone wants to know because Warren buffet is so successful. It all starts with leadership. Warren buffet is a true leader where his leadership makes a difference in the world. Leadership is very much related to change and Warren Buffett has the capabilities of leadership change to fit the changing world. Warren Buffett has repeatedly demonstrated the ability to map read in the irregular waters of change. Is Warren Buffett born a leader? The authors of this paper believe not. Experience and research has shown little evidence that an individual who comes to power is a “born leader.” Warren Buffett took the falls that any other leader has to take. Warren Buffett learned from his mistakes and turned his mistakes into a positive thing. Warren Buffett shares his leadership at all organizational levels and Buffett is empowered to share leadership responsibilities. In the world of business, many titles related to leadership roles are actively used in business and Warren Buffett wears those titles to make him effective in multiple leadership positions in business. Distinction between good leadership and good management is made often. Managers are made to be organizational, controllers and budgeters. Warren Buffett has leadership in all three departments and one must have these traits to be a good business leader.

Another important trait in Today’s business leadership is communication. Warren Buffet is a skilled communicator in all aspects of life. Communication is the real key of leadership. Skilled communicators have an appreciation for positioning in the business world. Warren Buffet is experienced at positioning himself at the right place at the right time. Warren Buffet has the understanding of the people he is trying to reach and what he can and cannot hear from the people. Knowledge of audiences’ needs and wants gives the orator the ability to listen. Warren Buffett is an excellent listener with the ability to convey his understanding.

When Warren Buffett talks, people listen. Warren Buffett can send a message through an open door and does not have to push the message through a wall.

Leadership is crucial to any successful business and good leadership is what Warren Buffett is all about. This is what makes Warren buffet a good business leader.

Mr. Warren Buffett’s investment strategies and course of leadership are shining examples of characteristics shared by cognitive theorists. Cognitive theory is an approach of explaining behavior through perception, anticipation, and thinking. Mr. Buffett’s continual approach of analyzing both possible investment choices, market trends, and the ability to place management resources of the right caliber in the right position has consistently brought this investor to the forefront amongst peers and the marketplace. At the core of every sound investor is a creative innovator.

Innovation demands creativity. Creativity in turn draws on our cognitive faculties, across the full amplitude from emotion to reason. In the number-heavy world of global investing, innovative thinking is critical. Innovative investors decipher future trends, spot likely winners by combining science (financials) with art (acuity and perception) and continuously mitigate risk. They assess user needs, product features, the proper deployment of money, professional organizational structures and risk management. (Kore Kalibre, 2006)

Mr. Buffett’s instinct and ability to interpret market trends is also held by tight reigns. Despite over 50 years of growth, Mr. Buffett always adheres to one of the most basic business principles: “…only compete where you have a competitive advantage. Warren Buffett refers to staying within your circle of competence. Social psychologists tell us, though, that we are prone to overconfidence when it comes to assessing our abilities…” (Arthridge, 2006) A man of Warren Buffett’s position and track record could easily be derailed to a sense of over confidence. The principle of only competing within your range of competitive advantage is a principle that can be applied to many other areas in life, and Mr. Buffett’s ability to work and live by this idea has allowed him to continue forward with minimal bruising.

By establishing the previous examples, the authors can reinforce the principles of cognitive theory in that Mr. Buffett behavior patterns are clearly dictated by thought processes, which include interpretation, analysis, and foresight. “As experiences and events gain meaning and value, the process becomes increasingly top down as the mind in (a) attempt at an orderly process influences perception though beliefs, goals and external process” (Gardener, 2007)

Warren Buffett’s is a self empowered leader, because he is loyal, sets goals, plans a strategy for achievement, and stays committed until he accomplishes his purpose. Up to date, he is the greatest stockbroker of all-time. He is a very conservative investor that prefers to invest in companies that sell name brand products that he uses. For example, Coca-Cola, Gillette Razors, See’s Candy, Gulfstream Jet, and GEICO are the major companies he invested in. In the nineties his assets quadrupled in less than five years. He is a smart investor that usually does not take big investment risks. For example, he will not invest in internet stock, because the return is unpredictable. He likes to invest in companies that he is sure will be successful 20 years later. He buys the company with the intentions of keeping it forever. Usually, the management team of each company is the same staff that sold it Warren Buffett from the beginning. He stays loyal to his partners, and the team workstheir best to keep him happy.

After Warren Buffett’s wife died, he decided to donate 85% of his money to charity. However, “he wants his money to be used the same year he donates it”.(Harris, 2006) The requirement will accelerate the process to help the world. According to Fortune magazine, five-sixths of his money will go to the Bill and Melinda Gates Foundation. This foundation which focus on finding cures for diseases that are common in poor nations. The rest of the money will be split among four other charities, that are each run by his three children and one that is in his late wife’s name.

Warren Buffett is not a huge spender. In fact, he still lives in the same house he bought 40 years ago. Warren “told ABC News “Nightline” that being born into wealth did not entitle his children”(Harris, 2006). In addition, he told Fortune magazine that, “A very rich person would leave his kids enough to do anything, but not enough to do nothing.”(Harris, 2006) In other words, he wants his children to work earn their money and value hard work and smart choices.

In the year 2006, Warren’s first annual donation to the Bill and Melinda Gates Foundation was $1.5 billion and the rest was divided among the four charities. He was the first person to make a donation better than Bill Gates, the richest man in the world. It seems as if Bill Gates and Warren Buffett set a good example and lead others to be more generous, because now the Barron Hilton has committed to donating half of his fortune to charity also. Barron Hilton is the founder of the Hilton Hotels and is worth $2.3 billion. Hopefully, a trend started among the fortunate to give to the less fortunate.

The personality of Warren Buffett ties to the Social Cognitive Level, because he tries to understand and make sense of other people. He observes the differences in social knowledge when dealing with people. Social cognition refers to making sense of ourselves, others, and how the information is used. In the sixties and seventies Albert Bandura and Walter Mischel were psychologists, studying personality development. They found that social learning and cognitive principles improve ones abilities to self-regulate and to follow goals. Warren investment choices were successful, because he conditioned his the way he processed information, choices, and expectations.

References - DO Not Strip References!

Gardener, J. (2007). Cognitive Behavior Theory. Retrieved December 26, 2007, from http://www.cognitivebehavior.com/theory/index.html

Harris, D. (2006, June 26,). Warren Buffett's Unprecedented Generosity. Retrieved December 31, 2007, from http://abcnews.go.com/print?id=2118501

Kore Kalibre (2006, March-April 2006). Warren Buffett’s Innovation: Staying away from Rapid Product Innovation. Retrieved December 26, 2007, from http://www.korekalibre.com/index.php?option=com_magazine&task=show_magazine_article&magazine_id=26

Legg Mason Value Trust (2006, October 26). Legg Mason Value Trust (LMVTX) Letter to Shareholders. Retrieved December 26, 2007, from http://markets.kiplinger.com/kiplinger?GUID=323448&Page=MediaViewer&Ticker=LMVTX

Wikipedia (2007, December 25). Warren Buffett. Retrieved December 18, 2007, from http://en.wikipedia.org/wiki/Warren_Buffett