The Top 10 Businesses to Be in During a Recession - Real World Recession Strategies

Top Ten Businesses in a Bad Economy

According to One Coach the following businesses tend to succeed during a recession:

1. Business Coaching

2. Business Networking

3. Alternative Fuels

4. Environmental Services

5. Health Care

6. Nail Salons

7. Discount Retailers

8. Luxury Products

9. IT and Technology Services

10. Credit and Debt Management

It is debatable whether Nail Salons and Luxury products truly do succeed in a recession. Item #9 in my view should be ranked higher in the list as businesses utilize technology to become more efficient and profitable during tight, recessionary periods. #3 and 4 are great forward looking businesses, but they carry a premium and subject to positive government policy and regulations. Just know you need to be prepared for the long haul with Alternative Fuels and Environmental Services as demand will ebb and flow directly associated to the whims of the White House and Congress. In addition, during down economies, you will need to aggressively sell how much these businesses can save consumers and businesses money in a significant, quantifiable way, since the offering will be products and services that carry a price premium. Glad to see my business at the top of the list! Businesses find out they need a business consultant and coach during downtimes-the smart ones know this before they get in trouble!

Real World Business Recession Tactics and Strategies

Some areas which Sara Wilson keyed on in the December '08 Entrepreneur Magazine Article, "Trend: Economy", which makes a lot of sense in this Economy:

1. A Business Idea that is Working right now: CouponMom

a) Stephanie Nelson started a website that teaches consumers how to save money buying groceries using coupons.

b) 2008 Revenue has doubled and the site had over 1 million unique users in July.

2. Local Scope: Due to financial pressures and an uncertain economic outlook, consumers are spending more time at home and closer to home.

a) Consumers are frequenting local restaurants and entertainment establishments, which are more low key and less expensive.

b) Instead of traveling to Disneyworld, families are utilizing "staycations", enjoying local area parks, lakes and beaches.

3. Green Business: Organics are and have been exploding in growth and the outlook is very good. People want to eat healthy and feed their family healthy food even when things are tight financially. Green conservation is another growing business niche.

4. Web Business: Why spend large start up dollars on a brick and mortar Business, when you can run the same or similar business from home, utilizing the internet?

a) Web businesses are very competitive and the learning curve is significant if you aren't familiar with web marketing techniques.

Sara Wilson had another good article, "How are Franchisees Dealing?" in the January '09 Entrepreneur Magazine that interviewed four different franchise business owners on how they were dealing with obstacles during this current economic slump:

1. Floyd's 99 Barbershop: The franchisee, Jay Palmer, couldn't find a loan for a new store. He tried using his home and his parent's home as collateral and no luck with banks, including trying to obtain an SBA or Corporate loan.

a. The Solution: Mr. Palmer found a personal investor (Angel Investor). The investor came into the shop for a shave and a haircut when Mr. Palmer wasn't around so he could get a good feel for the business. He ended up investing $150,000 after seeing a steady stream of happy customers and happy, energetic employees. This was a great move on Mr. Palmer's part, using a track record of success and clearly showing a sharp investor the real deal behind the potential success of his future business opportunity: great service, great product, happy customers and content, energetic employees. In just one site visit and the positive experience with the business' services, the investor was ready to supply the needed capital even after multiple bank turn-downs.

2. Kitchen Solvers: Franchisees, Carrie and John Borden Kircher, customer niche based changed. Their customer market became price orientated, and the business offers premium kitchen and bath remodeling. Leads dropped 19% and sales are down 25% over the last two years.

a. The Solution: Their solution is rebrand their vans, get new signs; increase letters to past customers; leave a gift with a customer after a job is complete; and working with their franchiser on the operational side of the business. Ok, as a Business Consultant I am going to give my two cents on the Borden Kircher's proposed solutions:

i. Rebranding Vans and New Signage: In my experienced opinion, this is a waste of money. I would instead spend this money on a new Marketing Plan which concentrates on two areas:

a) How to target higher wealth clients in the market area.

b) How to sell price based customers on why premium services and products can save them money in the long run. Once the new Marketing Strategies bring in profits, then it is a good time to upgrade signs and re-brand with those growth dollars.

ii. Increase Letters to past clients: Ok, but what is the purpose of a letter? The time to ask for referrals is the day the job is completed. When the client is happy with their new Kitchen or Bath. A newsletter with examples of completed jobs and customer testimonials, along with a preferred customer discount coupon, may be more effective in obtaining an add-on sale with an existing customer. A newsletter can also be a forum to introduce other services to current customers which they may not be aware, such as, having an article on the Design Services that Kitchen Solvers offers. The most cost effective, normally highest bang for your marketing buck, are continuing sales to existing customers.

iii. Leaving a Gift Basket with a Customer Post Job Completion: The Borden Kircher's are looking to implement better customer service and they believe customers are looking for the "Wow" factor. Leaving a gift is not customer service, and the wow factor should be as a result of a beautifully completed job. A Gift Basket will get neither. Customer Service starts at the Sales and Design Stage and continues throughout the job. The business owners showing up on the job to check on things and talk with the client is good customer service. Meeting with the customer in person after a job is completed to go over everything and ensure the client is happy is good customer service (and a great time to drop off the latest company newsletter and ask for several referrals). Customer Service is showing up on the job when the client is unhappy with the contractor's work. This type of highly motivated customer service will create the Wow factor for Kitchen Solvers, along with a quality, premium, beautiful look in the finished kitchen or bathroom, leaving a lasting impression.

iv. Work on the Operational Side with the Franchisor: This is one of the fantastic advantages a Franchisee can leverage: utilizing the experience and resources of the Franchisor. Some Operational Tips I would make as a Business Consultant:

a) Analyze product costs and see where you can cut costs yet still retain a premium, high-end image with quality products and value added results.

b) Work on a Supplier Business Plan which strengthens your relationship with your suppliers, tapping their assistance, experience, resources and expertise to bring better product offerings to your customers.

c) As previously stated re-work the Marketing Plan, along with making the resulting key changes in the Strategic Plan to better anticipate future market trends and adapt operations more proactively to those indicating trends.

d) Examine the Operational Aspects of the Business Plan to see how you can better bridge the gap between the design sale stage and the install. Customers are more prone to pay a premium for a smooth, effective transition from concept and design to install and completion.

e) Incorporate add-on selling into your Strategic Sales Plan for existing customers. A happy customer is more apt to stick with the same company to continue remodeling, so be sure to have a built in process which engages customers and shows them other remodels you can accomplish for them. Add-on selling takes very little marketing cost for a big return and ties in well with solid customer service.

f) Have the Franchisor witness some sales and installs to see if areas for improvements can be identified. Incorporate these improvements into your Business Plan.

b. My Best Advice: Find a way to sell a premium product and service to higher wealth clientele and offer a product/ service which has a premium look and finish, yet appeals to price conscious customers. Search for innovative suppliers who can help accomplish this mix. Follow-up this new business model with strong customer service throughout all the sale and install stages. Concentrate on a post-completion walk-through which asks for referrals and start the add-on sale process. Follow up with a monthly newsletter which contains add-on ideas and offers a loyal customer discount. The Borken Kircher's have a lot of challenges in this economy, and as they said, "you can't just sit around waiting for people to call." Use this rough patch as a learning experience in staying ahead of changing market trends, analyzing costs and making new plans for future success. A premium product + great customer service + a quality install + great value = a viable business model in any economy. Just don't wait two years to make changes.

3. The Melting Pot Restaurant: The challenge Franchisee Michael Frampton was facing during the Real Estate Crash in California was establishing the restaurant in a new shopping center when 10 other centers in the area were all opening at the same time. On top of this significant challenge, property taxes went up from $500 a month to $2,500, which meant $2000 a month cost comes straight off the bottom-line, never being budgeted for.

a. Solutions: Mr. Frampton shows why he is going to be a successful business owner. Clear steps and strategies to overcome the current situation:

i. Loyalty Cards: This is a fantastic move. Appreciate your regular customers during the hard times, and they will keep your doors open.

ii. Mass Mailing: Targeted within a 10 mile radius as there are so many competing restaurants in the immediate area. Targeted mailing is measurable, which is key during tough times.

iii. Analyze where you are spending money and the areas which can be controlled (not necessarily cut): Mr. Frampton actually saved $500 a month in focusing on linen costs for towels used to clean the restaurant. He also analyzed energy cost: when they turn on equipment and the length of time it's used. A third major cost area for restaurants is staffing, which Frampton cost analyzed as well.

iv. New Business Opportunity: He started opening for lunch on Sundays. Why? Probably because customers come after church with their families to enjoy an upscale meal, as do the late weekend risers searching for a good brunch close to home. One of the best analyses a restaurant can perform is looking at the average customer flow, food sales, alcohol sales and costs for each day of the week it is open to determine what days are best to be open and the reasons why. Armed with that information, you can adjust staff schedules, open hours and food prep costs much more strategically. Mr. Frampton apparently thinks the added costs of being open for lunch on Sunday is worth it, based on good cost analysis.

4. EmbroidMe: Wendy and Todd Diskin own a franchise that specializes in promotional solutions for businesses, which includes decorating apparel and screen printing. Their challenge has been rising costs from their suppliers. They have experienced a 5% increase in the Cost of Goods over the last year.

a. Solutions:

i. Competitive Pricing vs. Solution Based: The custom product industry is price competitive. With rising costs, the Diskin's have provided a more solution based approach so the buying decision isn't just made on the quote. For instance, if one of their customers is trying to increase readership, they figure out how EmbroidMe products or services can help the client achieve that goal and come up with a program to do so. Then the decision becomes one of "risk and reward and ROI instead of price..." Selling solutions alongside your product and service offerings is a way you can separate your company from the competition and still retain premium pricing in a price based market.

ii. Continuous Marketing Software: This program sends letters and emails so the Diskin's can "stay in front of their customers on a regular basis without a ton of effort...." This software program keeps the company engaged with customers, giving EmbroidMe first opportunity to make another value added sale or track how customer market trends may be changing.

iii. Vendor Relations: Leveraging a strong advantage franchises have, EmbroidMe Corporate negotiates the best pricing and strategic relationships with suppliers for their franchises. This is a huge advantage as it is a time consuming task and volume pricing from a Global Corporate level is much more advantageous than negotiating on your own as a single business unit. So it is apparent that although COGs has risen, EmbroidMe is still very competitive and successful, even in a recession.

Conclusion:

This article used real world examples and combined it with the business experience of a 20 year veteran Business Consultant to provide you with real world examples and strategies to use in order to start, run or adjust a new or existing business in a struggling economy. In a recent article I discussed Recession Survival Planning, and how it is a must and utilizes good Strategic Planning, Diversification Techniques, Contingency Planning and Cost Management. In another article I discussed various Recession Finance Techniques for your business which are particularly good during a Recession, which include Networking, Supplier Finance, Lease Finance and Local Business Loans. To conclude in this article, I identified certain types of businesses which excel in an Economic Downturn and why they are successful. My best advice for starting or operating a business during Recessionary times is as follows:

1. This Recession will have an impact for at least 3 years. So keep that in mind when planning for your business.

2. Track record, Experience, Niche Market Identification and Cash Flow are keys in raising funds for your business.

3. Solid, Comprehensive Business Planning, along with realistic, accurate Market Planning and Financial Forecasts are very critical during challenging economic times. An effective Strategic Plan is integrally important in bridging the gap between a Marketing Strategy and Realistic Financial Forecasting.

4. Out of the box thinking: For Brick and Mortar Companies, key on strong local areas and/or utilize the web to efficiently bring a product or service to the market.

5. Price Competitiveness becomes less important if you sell value-added business solutions to your customers and have tight controls on costs.

Frank Goley is a business consultant and business coach, and he works for ABC Business Consulting. He is an expert in developing, writing and implementing business plans, business funding plans, marketing plans, strategic plans and business turnaround plans. Frank is author of The Comprehensive Business Plan Workbook - A Step by Step Guide to Effective Business Planning, and he writes the Business Success Strategies Blog.

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Business Planning For Recession Survival and Recovery

The New Basics of Business

With unemployment continuing to rise, home prices falling due to a surplus of inventory, and small business lending at a standstill, this recession doesn't seem likely to end soon. The recovery will be slow and Americans will certainly not enjoy the prosperity of a few years ago for a long time to come. It's not just economists who think this way. "Half the population in [a] new ABC News poll thinks both job security and retirement prospects in the years ahead will remain worse than their pre-recession levels." ("Poll: Less Job Security is the 'New Normal,'" ABC News The Polling Unit, June 15, 2009, analysis by Gary Langer) This confidence, or lack thereof, is an integral part of an economic cycle. The analysis goes on to say, "Those diminished expectations - plus the pain of the current downturn - are fueling retrenchments in consumer behavior that could fundamentally reshape the economy."

Basically, consumers are hunkering down to limit spending, save money, conserve resources, and change the way they've been living. The major influence on the health of an economy is the psychological state of its consumers. When there exists a broad belief that spending beyond necessity is unwise, people will change their habits and as a result, some businesses will have to close their doors. The economy is molting into a new, leaner animal. Rather than react in desperation to avoid doom, firms should interact with the current situation with innovative and forward thinking actions.

No matter the economic slump, increasing profits is typically the number one goal of any business. To ensure profitability, a company must demonstrate a competitive advantage over others in its industry, either by cost leadership (same product as competitors, lower price), differentiation (same price, better services), or focusing on an exclusive segment of the market (niche). For long term maintenance of competitive advantage, a firm must ensure that its methods cannot be duplicated or imitated. This requires constant analysis and regular reinvention of competitive strategies.

A recession is the optimal time to reinvent competitive advantage because the pressure of a feeble economy will separate the strong businesses from the weak ones, with the weak falling out of the game entirely. Your business will be strong if you have a plan of action based upon a little industry research, an analysis of what you have and what you want, and continuous monitoring of the results of your plan. This kind of innovation is not only a necessity right now, but it is an opportunity to improve the quality and efficiency in the way you do business.

The three basic actions for growing a business in any economic climate are: improve efficiency (maintain output while reducing inputs, such as time and money); increase volume (produce more in order to spread fixed costs); reorganize the business (change goals, methods and/or philosophy). If you plan to implement one of these, you may as well plan to implement them all. By focusing on one of the above strategies, you will find a ripple effect that causes a need to address the others. This is a good thing.

Right now, growth may sound like an unattainable goal as businesses are grappling just to survive, but hey, "flat is the new up." If a business can keep its doors open and lights on, then it's doing better than many others. But lights and open doors don't make sales, so making changes that attract business is in a sense, striving for growth. It won't be this tough forever, but for now, putting some growth strategies into action may be what keeps your business alive, if not thriving.

Every Business Needs a Plan

Without a plan, there is little hope for growth, let alone survival. As my small business development counselor, Terry Chambers says, "If it's not written, it's not real." That doesn't mean it's unchangeable, but it does show that you mean business. In order to accomplish your strategies of improving efficiency, increasing volume, and reorganizing your business, you've got to examine what you have, what you want, and how you plan to get there.

Sometimes it takes a significant event or change in existing conditions for a business to create a written plan. I think it's safe to say that the state of the economy is a significant change that should prompt business owners to alter the way they've been doing things. If you already have a business plan, it's time to get it out and revise it. Make sure your plan includes answers to these questions:

What do I want to accomplish?
What do I have to work with?
How have I done in the past?
What might I do in the future?
What will I do now?
How will I do it?
Is it working?

A business plan can be used as a vehicle for accurate communication among principals, managers, staff, and outside sources of capital. It will also help to identify, isolate, and solve problems in your structure, operations, and/or finances. Along with these advantages, a business plan captures a view of the big picture, which makes a company better prepared to take advantage of opportunities for improvement and/or handle crises.

Essentially, the three main elements of a business plan are strategies, actions, and financial projections. In order to cover all of the principle elements, you will engage in other types of planning:

Marketing plan: Includes analysis of your target market (your customers), as well as the competition within that market, and your marketing strategy. This plan is usually part of the strategic plan.

Strategic plan: Asses the impact of the business environment (STEER analysis: Socio-cultural, Technological, Economic, Ecological, and Regulatory factors). Includes company vision, mission, goals and objectives, in order to plan three to five years into the future.

Operational planning: With a focus on short-term actions, this type of planning usually results in a detailed annual work plan, of which the business plan contains only the highlights.

Financial planning: The numerical results of strategic and operational planning are shown in budgets and projected financial statements; these are always included in the business plan in their entirety.

Feasibility study: Before you decide to start a business or add something new to an existing business, you should perform an analysis of its strengths, weaknesses, opportunities, and threats (SWOT analysis), as well as its financial feasibility, then asses its potential sales volume.

The process of business planning does not end when the written plan is complete. Business planning is a cycle, which includes the following steps:

Put your plan of action in writing.
Make decisions and take action based upon the plan.
Gauge the results of those actions against your expectations.
Explore the differences, whether positive or negative, and write it all down.
Modify your business plan based upon what you learned.

President of Palo Alto Software, Inc. and business planning coach Tim Berry says, "Planning isn't complete unless you've planned for review." Review is the fundamental action that initiates putting your business plan into action. In his blog at Entrepreneur.com, Berry lists some insightful strategies to making good use of your plan review, a few of which include keeping the review meetings as brief as possible and an emphasis on metrics as key to effective review.

Write your business plan in sessions. Don't think that you have to produce a business plan before go to bed tonight or you won't be able to open your doors for business tomorrow. I like Tim Berry's Plan-As-You-Go method of business planning. The practice of planning is an effective way to really get to know your business and you might end up discovering some important things about your company and about yourself.

There are various strategies and outlines available that will guide you in choosing the appropriate format for your business plan. Check out the collection of sample business plans for a variety of businesses at Bplans dot com. Every business is different, therefore every business plan will be structured differently, but for the purposes of this white paper, I will present the fundamental elements that make up strategic, operational, and financial planning. Here is a basic outline, thanks to NxLevel® for Entrepreneurs (2005, Fourth Edition):

General Business Plan Outline

Cover Page

Table of Contents

Executive Summary

Mission, Goals and Objectives

General Description of the Business

Stage of Development

General Growth Plan Description

Mission Statement

Goals and Objectives

Background Information

The Industry

Background Industry Information

Current/Future Industry Trends

The Business Fit in the Industry

Organizational Matters

Business Structure, Management and Personnel

Management

Personnel

Outside Services/Advisors

Risk Management

Operating Controls

Recordkeeping Functions

Other Operational Controls

The Marketing Plan

Products/Services

Products/Services Description

Features/Benefits

Life Cycles/Seasonality

Growth Description (Future Products/Services)

The Market Analysis

Customer Analysis

Competitive Analysis

Market Potential

Current Trade Area Description

Market Size and Trends

Sales Volume Potential (Current and Growth)

Marketing Strategies

Location/Distribution

Price/Quality Relationship

Promotional Strategies

Packaging

Public Relations

Advertising

Customer Service

The Financial Plan

Financial Worksheets

Salaries/Wages & Benefits

Outside Services

Insurance

Advertising Budget

Occupancy Expense

Sales Forecasts

Cost of Projected Product Units

Fixed Assets

Growth (or Start-Up) Expenses

Miscellaneous Expenses

Cash Flow Projections

Break-Even Analysis

Monthly Cash Flow Projections - First Year

Notes to Cash Flow Projections (Assumptions)

Annual Cash Flow Projections - Years Two and Three

Financial Statements

Projected Income Statement

Balance Sheet

Statement of Owner's Equity

Additional Financial Information

Summary of Financial Needs

Existing Debt

Personal Financial Statement

Appendix Section

Action Log

Supporting Documents (Resumes, Research Citations, etc.)

Executive Summary

A business plan starts with an executive summary, which is a one or two page summary of your business plan, or an introduction to your business. Although this section is at the beginning of the business plan, it is the last thing to be written. You'll be able to condense your business plan more succinctly once you have the opportunity to work through the other parts of the plan. The executive summary may be the only thing a potential investor or financier will read, so write it last because it has to be the most compelling.

Start by writing a description of your business, including what stage of development it is currently in (conception, start-up, first year, mature, exit) and your plans for growth. Discuss the nature of your business, the main products and services you offer, the market for your products and services, and how and by whom the business is operated.

Mission Statement

Then work on your mission statement. Here is where you concisely state the focus, scope and hope of your business (or values, vision, philosophy, and purpose). What is the customer pain you are soothing, the need you fulfill? Here's an example from Coca-Cola:

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.

To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.

PepsiCo has a different take:

Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

This is the mission statement of Inspiration Software, Inc.:

Our company strives to support improvements in education and business and to make a positive difference in our users' lives by providing software tools that help people of all ages use visual thinking and visual learning to achieve academic, professional and personal goals.

Goals and Objectives

Next, outline your company goals and objectives, including long-term and short-term goals. You will get into more detail on how the goals will be accomplished in your operational plan and annual work plan, so focus on brevity at this stage. There is a difference between goals and objectives and it's important to know what that is. I like how Andrew Smith explains it in The Business Plan Blog. Objectives are non-emotional, precise descriptions of what is needed to achieve a goal. Goals can involve emotion and don't have to be as specific as objectives. Objectives are the steps to actualizing the goal. Here's an example:

Goal:

To increase revenues by 50% by the end of the year.

Objectives:

Add a new product to our line.

Expand marketing outside of local area.

Develop a new customer retention strategy.

Of course, you will need a plan of strategies in order to accomplish each objective, but those details will be expounded upon in your annual work plan. A list of three short-term and three long-term goals, along with the objectives necessary to achieve them, is sufficient for most business plans. Remember to replace the goals and objectives with new ones as you check them off your list.

Background Information

The section that details the background information should start with identifying the industry your business is in. Even if you are not a member or have no intention of becoming involved, you should list any trade associations within that industry; you never know when you made need those connections. Find out what publications, magazines or journals are available to businesses in your industry. Use these and other sources of business information to identify how past trends (economic, social, political) affected the industry, as well as any current or future trends that may have an impact.

How does your business fit in the industry? What is the history of your business, including who started it, what changes have occurred, when was it started, where was and is it located, how was it started and operated, and why it was started? What barriers to entry, if any, have you recognized?

Organizational Matters

The ownership hierarchy of your business, the management structure, and the personnel are described in the section on organizational matters. This part of the plan deals with who, what and how your business runs. Who is in charge of what and how are they qualified? Discuss how the various parts of your business interact together; include details about outside contractors and consultants and what functions they perform. See the example below, thanks to Edraw Soft Vector-Based Graphic Design.

The organizational section of the business plan also needs to include an explanation of your record keeping process, checks and balances, and control management systems. Anyone who reads your business plan should be able to understand the organizational procedures for running your business day-to-day, as well as in an emergency situation.

The risk management plan needs to be fleshed out in the organizational section as well, including your risk strategy, the different types of insurance required, your contingency plans, and problem-solving protocols. What will you do if a natural disaster ruins part of your inventory? How will you handle the sudden illness or long-term absence of a key manager? What happens if you are unable to finish a project on schedule? What are some early warning signs to watch for?

It may not be pleasant to imagine all the "what ifs," but doing it now and planning for those unexpected events will improve your company's chances of surviving a storm. For an excellent step-by-step guide on the details of developing a risk management plan, see the article "How to Develop a Risk Management Plan," by Charles Tremper at wikiHow.com.

Marketing Plan

The next section, themarketing plan, gets into the details of what your business offers and what market it serves. Marketing is the communication of how your products and services "ease customer pain." Show the problem and how your business solves it. Marketing is a necessity for every business because once your doors are open, you must invite customers to come in. Everything you do in your business that affects customers is marketing because it sends a message about your company.

This part of the plan details the features and benefits of your products and services, their seasonality and life cycle, as well as any future products and services you are planning. It also includes a thorough market analysis, in which you will study your customers, your competition and the market itself. Here you should include a PEST analysis, in which you will consider the impact of various factors upon your business. The factors include combinations of the following, depending upon your business: social, technological, economic, environmental, political, legal, ethical, and demographic.

Studying your market will give you insight as to how you can make your business more appealing to people. Market research is more than just noticing trends in your customers' buying habits; it's discovering what motivates your customer to buy. Don't assume that you already know because you've been in this business for years. This study often unearths characteristics about your market that are hidden or new. It's best to discover these things before your competition.

Another key element to the marketing section of your business plan is an outline of your marketing objectives, strategies, and tactics. Writing down the avenues you travel in order to market your business will afford you the opportunity to record what worked and what didn't work. You must be able to measure and calculate the results of your marketing efforts, otherwise, what's the point? If you don't know if something is working for or against you, then it's working against you.

Include details about all of the following that are applicable to your business in the marketing section of your plan: location and distribution, and promotional strategies, such as packaging, public relations, advertising, and customer service. As a result of exploring these areas, you will naturally need to consider how much you will budget for your marketing efforts. This question is closely connected to your sales forecast, which leads us into the next section of the business plan.

Financial Plan

The financial plan consists of four sections: Financial Worksheets, Cash Flow Projections, Financial Statements, and Additional Financial Information. All of these components will tell the story of how you plan to start or grow your business from a financial perspective. It is vital that you explain the assumptions under which you have based your projections, for example, "We assume that there are no unforeseen changes in economic policy to make our products and service immediately obsolete." or "We assume interest rates will stay the same over the next three years." (both quotes from Bplans.com sample business plans)

I suggest that you construct easy to read tables and graphs for the financial portion of the plan. The worksheets suggested are: Salaries/Wages and Benefits, Outside Services, Insurance, Advertising Budget, Occupancy Expense, Sales Forecasts, Cost of Projected Product Units, Fixed Assets, Growth (or Start-Up) Expenses, and Miscellaneous Expenses. You may find some of the worksheet templates at PlanWare.org to be useful.

The expected revenues and expenses for at least a year should be projected in the cash flow section of the Financial Plan. It's better to make conservative predictions rather than be too optimistic when it comes to cash flows. As part of this section, a break-even analysis is essential. This is the "amount of units sold or sales dollars necessary to recover all expenses associated with generating these sales." (NxLevel for Entrepreneurs, 2005) The formula for calculating the break-even quantity is Total Fixed Costs/(Price - Average Variable Costs).

The financial statements section should show the way things are now if you have an existing business, as well as a forward look at your checking account, or projected income statement. The only way a start-up company can provide an income statement and balance sheet is by projecting these figures based upon well defined assumptions. Both start-ups and existing businesses should include a statement of owner's equity.

An income statement shows revenues minus expenses, in order to calculate net income or net loss. Start-ups should project these expected results for the first twelve months of business, then quarterly for the next two years. A list of a company's assets (what you own), liabilities (what you owe), and net worth (assets minus liabilities) is called a balance sheet. The statement of owner's equity shows the owner's initial investment, additional investments, and retained earnings, minus owner withdrawals.

The additional financial information at the end of this part of the plan should give a summary of your business's financial needs in order to grow, show its debt position, and state the owner's financial status.

Appendix

In the appendix, which is the final section, an action plan or timeline for implementing the business plan should be presented. This is where the detailed goals and objectives are expanded in a work plan. Also, include in this section any additional information or supporting documents that are relevant to your business plan, such as important research, marketing materials, product specifications, and owner and employee résumés.

Executive Summary

Now that you have written the hard part of your business plan, it's time to write the fun part, the executive summary. As mentioned in the beginning of this white paper, this is the most important piece of the business plan because it illustrates the very essence of your business in a captivating and condensed form. If you ever share your business plan with a potential investor or potential buyer, the executive summary may be the only thing that is read.

Make the executive summary brief (no more than two pages), but make sure you showcase the best qualities of your business without glossing over important information; show why yours is a winning business. Write one to three sentences about each of the following:

General description of the business
Mission statement
Management structure
Business operations
Products/services, the market and your customer
Your marketing plan, including the competition
Financial projections and plans

A clear, concise, and convincing executive summary will intrigue your audience and inspire them to read the rest of your plan. If the plan is never seen by anyone outside of your business, don't assume it was a waste of time. During the planning process, you will have worked through an enlightening exercise that prepares you to run and grow a better business.

Having this written document available for frequent consultation and review will improve your chances of not only surviving, but coming out strong on the other side of this recession. Most people think that knowing in the back of their mind what they plan to do is sufficient for survival or recovery, but the difference between a written plan and an idea is usually the difference between failure and success.

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Laura Walker is the Marketing Manager at Universal Funding Corporation. She writes articles about the world of business and the economy. Her blog, Factoring Vibe can be found at UniversalFunding dot com forward slash blog. She has written prize-winning business plans, numerous small business advice articles, as well as poems and literary criticism. Universal Funding Corporation is an accounts receivable factoring company in Spokane, WA. Not only is Universal Funding family-owned, but it is family-managed. Working shoulder-to-shoulder with their account associates, customer service, receivables management, and financial staff, the Wozows have daily interaction with their clients, treating them like part of the family.

With a broad spectrum of experience, the family at Universal Funding has roots in all aspects of business. A few staff are entrepreneurs; many have advanced degrees in their areas of expertise; some have been on the front lines of Fortune 500 companies. They have investing, banking, accounting, and legal experts on site and at their clients' disposal. As long-standing members of the International Factoring Association and the National Association of Credit Management (NACM), Universal Funding offers capital solutions to businesses large and small, local and national. Keeping apprised of trends and new developments in the commercial finance sector is important to them. Staff regularly engages in industry conferences and training courses, such as NACM's Commercial Credit Convention and the Experian Vision Breakout Sessions.

Providing fast capital funding to businesses for over a decade, Universal Funding has been a leader in the factoring industry since its inception. With over 63 years of combined experience, their financial specialists have expert knowledge of how to help businesses grow and prosper.

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How to Buy a Business During a Recession

Despite an economic downturn, poor sales, extensive unemployment and a banking emergency, this actually may be an excellent time to think about buying a business. The reason is really very simple: it's currently a buyer's market, which means the time is perfect for buying a business.

Buy business trends are on the upswing, with sellers relaxing their purchase business terms because there are fewer qualified buyers, third-party financing becoming near impossible, and opportunities to negotiate a really good deal for a business for sale aplenty.

However, the receptive climate for purchasing a business doesn't mean that you should advance without having key buy business essentials in place. It's very easy for enthusiastic, yet inexperienced buyers, to pay too much for a business for sale that has no chance for survival, even in good times.

First and foremost, it's important to know the purchase business climate before even considering whether to own a business. Currently, the buying a business market is being crippled by the economy and there is a lack of small business lending. Consumer confidence that the economy will turn around anytime soon is very low and many businesses are seeing multi-month declines. For these reasons, it's necessary when considering a business for sale to negotiate a deal that will protect you now and in the future if the economy doesn't improve in the near-term.

Before deciding whether to own a business during these tumultuous times, there are six basic buy business steps to follow. By following smart purchase business philosophies, you will position your new business to succeed regardless of the economic climate.

Here is a look at the six important steps to buying a business:

1. Request Several Previous 12-Month Profit & Loss Statements. Normally, a seller would provide year-end financial statements, any interim statements and tax returns for buy business inquiries. But considering the current economic conditions, you need to see the business for sale financials from the current date and back to the past 12 months, as well as financials from the prior 12 months and the 12-month period before that. This will give you a better picture of the overall health of the business for sale.

2. Be On The Lookout For Hidden Expense Cuts. With a business for sale, many sellers try to make the company look better by making cuts to enhance profits. When reviewing the financials, look at expenses for marketing, advertising and payroll by doing an item-by-item comparison over several periods and comparing the number to sales or income. Furthermore, a review of the balance sheet will show whether inventory has been cut or if shareholders or owners contributed their own money to improve the company's bottom line.

3. Review The Customer Base. When purchasing a business, a thorough understanding of the current customer base is crucial. Although a business may be performing well, sales might show problems. If you decide to buy a business where sales are declining, make sure that you modify the purchase price accordingly and establish a new sales and marketing plan.

4. Negotiate Earnouts. These are purchase business terms based on performance. Linked to the purchase price, earnouts are assurances that the business for sale can survive in the current economic climate and grow in the near future. Once you've completed a thorough analysis of the books, set an asking price that's directly related to the present performance of the business and its sustainability for possible future declines. It is critical to negotiate a performance-based deal, especially if the purchase business evaluation indicates a loss or no recent stability or growth. With an earnout structure, the seller receives the balance of the purchase price when certain targets are met in the future. Earnouts can be based on profitability, sales, or retention of customers.

5. Insist on Seller Financing. As far as lenders are concerned, this is not a buy business climate. So chances of you receiving financing for buying a business are slim, especially if you have little collateral or no business ownership experience. As such, it's important that the seller finance the entire purchase business price or a large portion of it.

6. Don't Be Intimidated By Business Brokers. They represent the seller, so it's their job to present a positive buy business environment. As such, you need to take control of the deal.

When buying a business, it is essential to obtain all the key financial and performance data related to the business for sale. This information is your bargaining tool when meeting with the seller. You can own a business and be successful at it if you make well informed purchase business deals with the seller to limit your risk. Despite the present business climate, it's exhilarating to own a business and there isn't anything that should get in your way of realizing your dream.

Richard Parker is the President and founder of the Diomo Corporation - The Business Buyer Resource Center. His inspiring materials, seminars and consulting have assisted thousands of business buyers with achieving their life long dream of buying a business. Want to learn more about effective business buying strategies that actually work, then look no further than http://www.diomo.com.

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