The core reason your business exists is to provide a product and/or service to the marketplace that solves a problem or meets a need. The problem or need should be something that’s really troubling or compelling and supported by evidence from market research, focus groups, letters of intent -documentation that the pain is real.

Your solution is what you provide to customers and how you deliver it. It is the reason you are in business. It is the answer to the painful problem you documented, and it solves it in a manner that is superior or less expensive than current solutions. Solution design fully considers knowledge of your customer and is fine-tuned to customer need. Your marketing and product strategies will be developed around the problem/customer/solution equation.

The better you can define your customer the better you will be able to target them. Identify your target market segments and establish who is involved in the purchase process and who makes the buying decision, as your customer may not necessarily be the end user. Evidence of customers' willingness and ability to acquire solution is imperative and can be determined through speaking with potential customers, sample product launch, analyzing direct competitor’s sales, etc.

You may have more than one customer group. Identify the most important groups and for each customer group, construct a profile to help you recognize and reach them:
• Age
• Gender
• Location
• Income level
• Social class and occupation
• Education
• Other (specific to your industry)

To effectively compete in any industry you must understand your customers and your competition. Performing research and competitive analysis should be the first tasks you complete after you have created your idea. This research is essential to the success of your venture to validate the existence of your business. Some of the questions you should answer through your research are:

• For your customers:
o Who are your target customers?
o Why are they your target customers?
o How many are there?
o What do they currently do in place of your product or service?
o Why would they choose your product or service?

• For your competition:
o Who are they?
o What is their business model?
o How do they make money?
o What are their weaknesses?
o What are their strengths?

Research should include a comprehensive overview of industry, environment, and competition. To analyze the competition and your businesses position in the market you can create a SWOT (strengths, weaknesses, opportunities and threats) analysis on at least four competitors. Understand your competition and do not worry if there are others already providing a similar product or service. Find out what their weaknesses are and improve upon their business model.

Resources:
• http://www.inc.com/guides/start_biz/24018.html
• http://www.gaebler.com/Importance-of-Market-Research.htm
• http://www.entrepreneur.com/startingabusiness/businessideas/evaluatingyo...
• http://www.usatoday.com/money/smallbusiness/columnist/strauss/2004-10-18...

This is what sets you apart from current offerings and enables you to compete successfully. Ideally, you want it to be something that can be sustained for the life of the business. Patents, exclusive access to goods or distribution channels, operations and/or technological advantages, and first mover advantage are several ways to gain advantages on the competition.

There are two main strategies to differentiate your business:

• Cost Differentiation – The objective here is to have the lowest prices in your industry. Examples include Dell Computers, Southwest Airlines, Nissan, and Wal-Mart.
• Differentiation –Gives customers clear reasons to purchase your product over others. Examples include Apple Computers, Singapore Airlines, Mercedes-Benz, and Whole Foods.

You should have a clear and accurate understanding of what sufficiently differentiates your business in a manner that enables reaching your financial goals, creates value for the target customer, and protects your market position.

• Further reading
• A great way to analyze your industry is using Porter’s Five Forces

Sales are the lifeblood of your business. Whether it is a product or service you are selling, you need to communicate that what you have to offer solves your customer’s problem. A great place to start is with a SWOT chart analyzing the Strengths and Weaknesses of your company and the Opportunities and Threats of the external environment. With a clear understanding of your position in the marketplace, a good tool for classifying marketing decisions is “The Four P’s:”

• Products – What will the product look like, how will it function, how will it be packaged, what are the terms of the warranty, etc.
• Price – Should consider your target market and competitive offerings. Will you offer discounts? Financing? How are your competitors likely to respond?
• Place – What are your distribution channels? What are the logistics of getting your product into the hands of your customer?
• Promotion – Advertising, public relations, promotions. You need to make your customer aware of what you offer. Figure out the best way to reach your target market with regards to sales revenue in per promotional dollar out.

It is wise to establish tangible, realistic, measurable, and achievable sales goals (by revenues, units, and customers) as milestones for yourself and potential investors.

• Further reading on: Marketing

• Pricing :
- http://www.sba.gov/smallbusinessplanner/manage/marketandprice/serv_4ps.html
- http://www.netmba.com/marketing/pricing/

Management's background and experience is adequately documented in the plan and enhances the value of the corporation. Gaps in management team core competencies are recognized and business plan outlines tangible strategies to resolve. Related policies, compliance issues, and regulatory environment are addressed.

Your management team is as important as your business idea itself. If you do plan on seeking financing, people reading your business plan will be looking to see not only who’s on your management team but how the skills of your management and staff will contribute to the bottom line. Some considerations include:

• Internal Management Team – Your organizational hierarchy. No successful business can be a one person show for long. As you grow your business you will need people to lead different aspects of your organization. It is not necessary to have a different person in charge of each business management category; some key management may fill several roles. Choose people with skills complementary to your own.

• External Management Resources – Every smart business needs:
o Professional services – Accountants, bankers, lawyers, IT consultants, etc.
o Advisory board – a management “think tank” of sorts. Much like the parent of a 25 year old, it does not have any legal, formal responsibilities, but rather is there for advice and support.

• Human Resources Needs - Begin with the bottom line. How many employees will your business need, what skills must they possess, what will it cost you, where will you find them, and how will you train them? Universities are a great place to find fresh, eager minds that might even be willing to work for equity.

• Further reading:
o Human Resources FAQ
o Compiling an advisory board

• Community Resources:
o McGuire Entrepreneurship Center – Full of bright, young students with an entrepreneurial mindset.

The old adage, “If you fail to plan, you plan to fail,” is very true when beginning a venture. Your business plan is a road map and tool to help you brainstorm, research, and navigate your business. It should explain the who, what, where, when, why and how of your venture. It incorporates many of the topics found on this website.

Most business plans include:
• Title Page and Contents
• Executive Summary (one page summarization of the entire plan)
• Problem (the issue you are addressing)
• Solution (your answer to the problem)
• Customers
• Competitive Advantage
• Industry and Environment
• Marketing
• Sales
• Business Model
• Operations
• Management Team
• Status Timeline
• Financial Pro Formas
• Funding Considerations, Models, and Proposals
• Appendices -Supporting Documents and Research

Beginning with a business plan that addresses these topics, forces you to analyze all areas of your business. A business plan is meant to grow and develop as your company grows and develops. As your company changes your business plan and strategies will change also. By periodically reviewing and updating your business plan you are again forced to analyze your entire business and plan accordingly.

Resources:
• http://www.entrepreneur.com/encyclopedia/categories/businessplans/117346...
• http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html

Community Resources
• Green Giants Consulting is a local firm that specializes in business plan creation

This is where you explain the intricacies of your business. Some important questions to consider include: How does your company work? How do you earn money? Where do you obtain your resources or raw materials? What do you do with these resources? How do your products or services reach your customers? The “What?” and “How?” of your company are answered by your business model. Your model combines all aspects of your company and is the basis on which you operate.

Basic business models revolve around a similar concept:

Your business model strategy should be efficient, effective, and recognize customers’ needs. It should be fully integrated into your marketing, sales, operations, management, and financial plans. The business model is where you should start when planning your business. All other branches of your company lead from and back to your business model.

Resources
• http://www.businessweek.com/smallbiz/content/feb2009/sb20090226_798877.htm
• http://www.quickmba.com/entre/business-model/
• http://digitalenterprise.org/models/models.html

You have a few choices when creating the legal structure of your business. The three main types of companies are a Limited Liability Company (LLC), C-Corporation and S-Corporation. These different structures have different strengths and weaknesses, depending on your business’s needs.

Limited Liability Company

Pros:
• Provides owners with liability protection
• Can be taxed as a partnership (no corporate earnings tax)
• Typically less ongoing paperwork
• More flexible regulations

Cons:
• Tax liability can vary by state
• Cannot go public
• Some states require two or more partners

C-Corporation

Pros:
• Can go public
• Can have incentive stock plan options

Cons:
• Double-taxation
• Require more ongoing paperwork

S-Corporation

Pros:
• Can go public
• No corporate earnings tax

Cons:
• Require more ongoing paperwork

The decision of company structure may not be your own as investors may require that your company a specific structure. Reference the linked articles for more information on these structures and, if necessary, seek legal counsel.

Resources
• http://www.nolo.com/article.cfm/objectId/9D0C8698-EC1E-4561-A1FDC7FC4BC2...
• http://onstartups.com/tabid/3339/bid/1303/Startup-101-Should-You-Form-An...
• http://www.bankrate.com/brm/news/biz/Biz_ops/20000831.asp

Community Resources:
Hecker & Muehlebach PLLC - (520) 798-3803

Even if you are not an accountant, you must understand how your business makes money. The main financial concerns are your revenues and expenses. How much money do you earn every time you sell a product or service? And how much does it cost for you to sell that product or service? You must answer these basic questions before knowing if your business is financially sustainable. By making realistic and reasonable estimates for the amount of products or services you are going to sell and the expenses you will incur, you will understand the relationship between your revenue, expenses and profit. If a venture cannot function financially it will not be sustainable long-term.

Three financial reports help you to monitor the financial health of your business. An Income Statement (also referred to as Profit & Loss or P&L) provides information on the revenues, expenses and subsequent profit (or loss). The Balance Sheet details the assets, liabilities and shareholder’s equity. This statement shows what a company owns and any outstanding debt. A Statement of Cash Flows is a financial statement that shows the inflows and outflows of cash from the three activities of the business: operating, investing and financing. These statements help you to assess the financial health of your business and make the necessary changes to be financially sustainable.

While keeping an eye on the present you must always be thinking ahead. Projecting expected future financial growth will help you to set goals and measure success. Based upon your research, previous experiences, and expectations, make projections for the future financials of the business. These projections are your financial pro formas. You should periodically project financials for at least 6 months, 1 year and 3 years into the future.

Resources:
• http://www.sec.gov/investor/pubs/begfinstmtguide.htm
• http://www.investopedia.com/university/financialstatements/
• http://www.quickmba.com/accounting/fin/statements/
• http://www.studyfinance.com/lessons/finstmt/index.mv

Every business needs money to start. You might need a little or a lot, but you will need start-up capital. There are a number of sources of funding for your business. Below is an explanation of the main sources.

According to Entrepreneur.com, “Bootstrapping is one of most effective and inexpensive ways to ensure a business' positive cash flow. Bootstrapping means less money has to be borrowed and interest costs are reduced.” Bootstrapping provides the funds for the beginning development and growth of the company through the entrepreneur’s own money and the internal cash flows of the company. Many times owners and employees forgo pay and may even work another job to fund the business until it provides enough cash to begin working full-time. This is the most basic and simplest form of funding.

Other forms of funding usually come from outside sources: family, friends, banks, angels and venture capital firms. Friends and family are the most common source of debt financing for start-ups. It is exactly what it sounds like, borrowing money from those friends and family willing to support you in exchange for equity or repayment with interest.

Bank loans are another option for start-ups. These are similar to other loans for a bank but depending on the value of the business and size of the loan, you may have to put up some personal assets as collateral.

Angel investors are anyone who invests their own money in entrepreneurial ventures. As well as providing funding they can be a great resource for other business contacts. Most likely there are angel investors or angel groups in your area. An angel investing group in Southern Arizona is Desert Angels.

Venture Capital (VC) firms are professional investing companies that specifically invest in growing businesses. They are often the most challenging to obtain funding from and usually seek a large ownership percentage in exchange for their investment. VC’s look for companies that have already proven their business model through market share, revenue growth or entrance into an emerging field and need an infusion of funding to rapidly expand growth.

Funding is necessary for every business. Every source has pros and cons, but all of them will want something in return for their money. Think about your business’s needs and which source of funding will best help you achieve your goals.

Resources:
Further discussion of funding options

• For more information on specific types of funding:
o VC Funding
o Angel Investors
o Bank loans
o Friends and Family

• Bootstrapping
o http://www.entrepreneur.com/encyclopedia/term/82236.html.
o http://www.entrepreneur.com/magazine/entrepreneursstartupsmagazine/2002/...
o http://venturebeat.com/2008/11/20/the-art-of-the-bootstrap/
o http://www.entrepreneur.com/magazine/entrepreneur/2009/may/201102.html