Keystone Blind secures $5M federal contract

HERMITAGE – For people who are legally blind, the unemployment rate typically runs at 70 [...]

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Met-Ed to spend $245 million on power grid improvements

Metropolitan Edison will spend more money this year to improve the electric transmission and distribution system in its territory, which includes parts of the Lehigh Valley.Met-Ed's corporate owner, FirstEnergy Corp., said it estimates it will spend $245 million to improve service, cut the number and length of power outages and boost power in certain areas. Met-Ed spent about $130 million on similar projects in 2016.Work includes upgrading sections of underground networks in [...]

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How to Write a Great Simple Business Plan for a Small Side Business

Several weeks ago, I wrote an article on starting a side business as part of my larger 31 Days to Financial Independence series. In that article, I advocated strongly for writing a business plan for even a small little side gig:

“Develop a real business plan for each idea. Take each of those three ideas and flesh them out into a business plan. This seems like a painful formal process to many, but there’s a very good reason for making a business plan: it helps you see the potential problems in your idea before you start running with it, which means you can think of ways to get around those problems so that you’re more likely to have success right off the bat. […]

I did this with The Simple Dollar (back then, I used a business plan book from the library rather than [the] great SBA resources that exist today) and with many other small businesses I’ve dabbled in. The process of writing such a plan has almost always helped me see obstacles and helped me figure out how to deal with them before they become disasters that I’ve invested many hours in. I’ve walked away from many ideas after writing a business plan, and for good reason – they would have turned into black holes of time and money, slurping away all of those resources and giving me little in return.

Once you’ve written up a business plan using these ideas, pass them around to some trusted family members or friends or mentors. Send each one to a few people and get their feedback. Send them to people you trust and whose advice you trust and take their comments seriously. They might be really negative on an idea that you think is great, but rather than just brushing it off as “jealousy” or something, stop and listen to what they’re saying. Often, the good people in your life are critical of something you’re doing for a reason – they may be seeing something you’re not seeing due to your own blind spots.

Often, this can turn into a feedback cycle, where people give you comments, you improve the business plan, and then you send it to people for a second reading or to new people for a fresh reading. The goal is to develop a plan as well as you can so that you have a strong plan going forward when you start.”

This section seems to have touched on the imagination of quite a few readers, several of whom sent in feedback wanting to know more about writing a plan for a small side gig. A couple of readers even sent in business plans for their side gig for me to look at.

The clear consensus among these readers is that they saw the value of the idea of a business plan for their side gig, but that they wanted more guidance. What should they include? What should they be thinking about? I wrote a few personal responses, but then I quickly realized that it made more sense to put together all of the information in one single article to share with everyone.

What follows is a guide to assembling a business plan for a small side business. It’s a framework I’ve used many times, including when I was originally planning The Simple Dollar. The value in writing such a plan is that it forces you to think about these issues before you even start so that you don’t throw yourself into a plan that’s doomed to fail. Remember the goal of a small side business: it’s all about creating another revenue stream for you, giving you more income while you still have a main career and possibly giving you something to fall back on if you decide to move away from that main career.

First, we need to cover a few ground floor assumptions.

By its very nature, a small side business is one that doesn’t require a lot of initial funding. Whatever funding is required initially is something you’re investing out of pocket.

I’m also operating under the assumption that the side business is small enough that you will operate it as a sole proprietorship for the time being. This is what people tend to do when they’re tinkering around with solo side business ideas; when something seems to be promising, then they put a business structure around it. If you’re reaching the point where something more robust is in order, you should take a serious look at the business planning resources available from the Small Business Administration, which will guide you through the steps of actually setting up a proper business structure for your activities.

This guide is intended for people with a small idea that they can execute on their own without any outside investment and in their spare time – things like starting a Youtube channel, making jewelry or artwork to sell on Etsy, or writing a book. The reason for making a plan for this is to eliminate potential roadblocks up front and thus increase the chances that this microbusiness will grow to a point where you should start considering a full business structure, outside investment, loans, and so forth.

Ready? Let’s dig in.

The basic framework
A business plan is simply a document that outlines what you intend to do to make your business succeed over the next three to five years. It looks at potential obstacles in your path and helps you think through solutions to overcome them now so that you’re prepared for them when they arrive.

A business plan is not a guarantee of success. What it does instead is increases the chances for success to occur. You have a greater likelihood of having a hit on your hands if you created a business plan up front.

A business plan is actually just the formalization of a lot of healthy thinking about your business ideas before you start sinking a lot of time and energy (and potentially money) into it.

Remember, with a business plan for a side business, your focus is primarily on turning spare time and energy into money. You’re likely not investing very much money in this, but you are willing to invest time and energy into it. Because of that, most side businesses tend to involve a significant period of very slow and small growth until that cumulative time and effort begins to bring benefits. Keep that in mind as you plan.

So, what basic ingredients should you have in your business plan?

A summary should be a one page description of your overall business plan, condensing everything down into one page. This should be the first “real” page of your plan (you may want to have a title page and a table of contents first, particularly when you start sharing it with others for review.)

A market analysis should include a serious look at who your customers might be, who’s already serving them, and what gaps are available to you in that market. What are you going to provide that isn’t already being provided to your potential customers? Who are those customers? Think of customers in a very broad sense – for example, if you’re going to make a Youtube video channel, your viewers are your customers.

Service or products should include whatever it is you intend to make and sell or whatever service it is that you intend to provide. What exactly are you going to make or offer? What features does it have that makes it distinct? How do those features meet the unmet needs of customers as identified in the market analysis? What is the cost to you to produce this product or service and what will you be charging for it? Remember, starting a business of any size is a waste of your time if you’re not creating something that meets a real unmet need in the customers you want to serve.

Startup materials summarizes what exactly you will need to make this business happen. For a microbusiness, you likely already have most of those materials, but you should still include them here. Assume you have nothing – what do you need to make this business happen? Where will you be acquiring those things?

Organization is basically a description of the time and energy you’re going to put into making this a reality. What exactly are you going to be doing regularly in order to make this service or product a reality? Are you going to be spending three evenings a week on it? One full weekend day each week? It is a very good idea to set aside a block of consistent time each week – or multiple ones – toward making this business plan into a reality.

Marketing (and sales, if needed) is pretty straightforward, at least on the surface. You have identified customers with a particular need. You have identified something you can make that will meet that need. Now, how do you make those customers aware of your product or service? Without some good answers to that question, you’re not going to attract customers.

I honestly recommend starting a Google document for this business plan so that you can access it easily from anywhere and add ideas from anywhere as they occur to you. Remember, one of the main values of a plan like this is as a tool to collect your thoughts and organize them into something sensible, which is very likely to increase your odds of success.

Market analysis
This section really boils down to three questions. Who and where are your customers? What needs or desires do they have that aren’t being fulfilled? What will they give to have those needs or desires fulfilled? In answering them, more information is good, particularly when that information is based on actual data and conversations with potential customers. Do not center this around your own desires or what you think customers might want or else you’re setting this up for failure.

The first step, then, is finding your customers. Who are they? Who are the people you’re hoping to target? Where are they? Where do they spend their time? Do they have time or money available to spend on your product or service?

The next step is to look at the needs that these customers have that aren’t being fulfilled right now. What are they looking for that they’re not finding? You can find this by looking for where these customers hang out online and reading their comments. What things are they talking about that aren’t being fulfilled? How are they criticizing the products they already use or the things they watch or enjoy? Is anyone fulfilling that need?

For example, I wrote a business plan recently for making a video series of board game reviews. In doing customer research, I went to where potential viewers hung out and looked for the things they said that were missing from review videos. What things did they want to see that no one was really doing? Those comments provided the backbone of my plans for the videos.

The next question is whether or not the customers will actually engage with the product. Would they watch videos like this? Would they read books like this? Would they buy these products? Would they listen to this podcast? The best way to figure this out is to talk to customers. Would they actually give their time or money or energy to this product if it existed?

Services or products
You’ve identified something that people want that they’d be willing to devote their time and energy toward. The question is how you’re going to fulfill that need. What are you going to make that matches up with that need?

This is where you sketch out your actual product in detail. What are you going to make? What would individual items look like? How would you actually make that product? The more detail you go into here, the better.

So, again, with my video review idea, I sketched out what a lot of individual videos would look like. I identified a review system that I would use, laid out the contents of a typical review video, and made sure to highlight which bits were really distinctive and potentially of real interest to the customers identified in the market research section.

The focus here is on the end product that you’re going to create. Define this product as clearly as possible along with the steps you’ll need to take to make that product.

Startup materials
Naturally, you’ll probably need some things to make that production happen. Even for virtual things, you’ll still need a computer and a digital camera of some kind and likely some kind of internet connection. For other things, you’ll definitely need more things.

Think through this carefully. What do you actually need to make this product? Assume you have nothing at all. What’s needed to move from nothing to the finished product you want?

Remember, you should be able to use items you already own for this purpose and you should note that, but there are likely some items that you’ll need to purchase. Make sure that the expense is low – after all, this is intended as a side business with no outside investment. If the expense is in any way a challenge to you, you may want to rethink things and perhaps define a simpler initial product without as much startup expense.

Organization
The organization section should define your workflow. What are you going to be doing each day in order to make this product a success? What are the steps in creating each product? What time are you setting aside regularly to make this happen?

For a larger business, the organization section is more about figuring out roles for various people and outlining what their roles would be like, but in a side gig, you’re the only person involved and you’re filling all roles, so the organization section is all about thinking about the work that needs to be done, how you’re going to do it, and how you’re going to find the time and energy to do it.

Don’t be afraid to consider a point in the future where you may need some assistance with the business, but that shouldn’t be the focus. The focus should be on how you are going to get the products made in the short term.

Marketing
The marketing section is all about making sure that your target customers actually hear about your product in a way that won’t alienate them right off the bat. Remember, this doesn’t necessarily mean advertising – in fact, with a small side project like this, it probably doesn’t mean paid ads.

Instead, you should focus on things like becoming a part of a community of fans or people with shared interests and sharing what you made when the opportunity sensibly presents itself. Almost all communities resent it when someone from outside comes in and pushes their new thing or even if a regular member incessantly pushes something, but if it’s from a regular member who has consistently provided good input, a little self-promotion is usually welcomed and even celebrated a little bit.

This is a great way for you to get your product known to customers. Get deeply involved in communities where your customers reside. Be a helpful, positive member of those communities. When you have a good product, share it, but do it in a context that’s actually meaningful to the members of the community and serves an actual purpose, like responding to a question or adding a resource to a collection of resources, rather than pushing that product on its own. A single announcement is fine, but you can create backlash if you overdo it.

Finishing up the plan
When you have all of these sections written, write the summary, which basically sums up each section in a single short paragraph so that the summary of the whole thing fits on one page and put that at the front.

Then… let it sit. Just save it and don’t think about it for a week or two. Don’t even look at it.

After that time, open it up and start editing it. Clarify things that are unclear. Fix up any big flaws in your thinking that are now apparent because you gave it some time to rest. Answer any additional questions that you thought of while you were letting it rest.

You may find that doing this in a few cycles is really useful. More importantly, you’ll probably feel your plans getting better and stronger, and the better and stronger the plans, the more likely those plans will result in success.

The feedback loop
Once you’re happy with your plan, take that plan to a trusted mentor or friend, someone who you trust deeply and will respect what they have to say, even if it’s critical. Ask them to read the plan and give you any feedback they might have. You can “repay” them by taking them out to lunch and hearing their critiques there or finding some other small way of thanking them, especially when they provide extended feedback.

This may turn into a feedback loop. You may end up going back into your own cycle of revisions to improve things as you think about their feedback. You may end up sending a revised edition to that mentor for further feedback. You may end up taking a revised plan to a second mentor.

The goal of all of this is the same: you’re trying to identify as many flaws in your plan as you can before you start so that you don’t get sidelined by those flaws later on. The more effort you put in here, the greater your chances for success.

Trust your gut, though. There will come a point where the plan is pretty good, both in your eyes and in the eyes of the people who review it. When that happens, it’s time to launch and get the process started. Go put that plan to good use and start earning a healthy side income!

Final thoughts
Let’s be clear: this process takes a while. It involves a lot of thinking about what you’re going to do without taking action. Many people don’t want to invest that time.

Those people have a much higher rate of failure. They throw time and effort and money down dead end streets. They spin their wheels and never really achieve the things they want to achieve. Why? They didn’t think first.

Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Writing a business plan is the “sharpening the axe” part of the equation. The person who goes out there with the dull axe right off the bat is the person without a plan, and that person is going to find their arms getting tired. They’re going to be frustrated by their lack of progress. They’re going to get blisters. And they’re going to quit.

Sharpen your axe first by writing a plan and every move you make based on that plan will have a real impact that will move you forward.

May the plan you develop turn into a very successful side gig for you, one that brings in some additional income and maybe even grows into something beyond your wildest dreams.

Good luck!

The post How to Write a Great Simple Business Plan for a Small Side Business appeared first on The Simple Dollar.

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Every Freelance Writer Should Read This Interview About Money