The business plan
This is an update to the business plan I wrote in 2009 for my business. To see why I would do such a thing, check out my "What's The Plan" post. To check out the entire plan, please visit my business plan page. Enjoy!
This is my big update for the entire 2010 year.
This was a headache! Not in a necessarily bad way though. I had thought this update would take me perhaps 4 hours or so. I think I’m going past 16 hours now. What I failed to realize was that not only was I reviewing the 2010 year in this update, but I was revising the plan for 2011. It was the revising part that took so long.
For this update, I’m going to go section by section and comment on anything that I feel relevant. Anything in quotation marks will be direct quotes from my business plan.
Greg Lam Consulting’s slogan is “Making your business work for you”. It will specialize in aiding small businesses reach their business goals.
I have now decided to fly my banner under the name of Small Business Doer (or Small Biz Doer for short) and am running with the slogan “Helping small businesses do business”.
Probably the biggest shift I will be doing from 2010 and 2011 is putting a lot more focus on helping out small businesses through this smallbusinessdoer.com website. I will aim to pass on as much knowledge as possible from this site.
Monthly revenues for the last quarter of 2009 averaged $3,100 a month. Annual revenue projections are $53,750 for 2010 and $74,500 for 2011. No additional start-up capital is required and the company has no liabilities.
My revenues were 78% higher than my 2009 monthly average. In 2009 it was $3,100 a month, in 2010 it was $5,533 a month. For 2011 I want to bring this up to $95,000 or 43% growth. If I look at my budget in 2010, I also beat my budget. Revenue was 27% higher than budgeted and profits were 19% higher than budgeted.
2009 to 2011 Revenue
Something that I failed to do more explicitly in my financial projections was to focus on the profit. Revenue is a lot easier to achieve than profit. Any fool can sell a ton of goods at or below cost and amass, well, a mass of revenues. Profit is what you take home after expenses (revenue – expenses) and is really what is what most people think when they look at how much money a business is making.
Profit for 2011? I’m targeting $66,000. That’s $20,500 more than 2010 or a 45% increase.
Equipment
In 2011, I will continue to invest in equipment with a budget of $7,500. Equipment, along with education, is what I believe will help keep me growing and on the top of my game.
Where I got business from
The majority of my business in 2010 was obtained through existing contacts. This is something important to note as most of my business didn’t appear out of nowhere, they were from people I already knew. When people espouse the power of networking, this is what they are talking about.
To illustrate my point, here’s the stats:
93% of business was from people I already knew before 20107% of business was from people I didn’t know before 2010
Sales - New Contacts vs. Existing Contacts
Marketing
I will be concentrating less on gaining business consulting clients and more on education through this smallbusinessdoer.com website. The reason is scalability.
I can help many more people by passing on what I know through tutorials, demonstrations, and interviews than I can individually through one-on-one consultations.
Many small businesses struggle with cash flow and it can be a hard sell for someone to pay the rates I would like to get paid ($50 to $100 an hour) for my knowledge than it is to get many people to pay a fraction of that.
As an example, a video tutorial on how to utilize a piece of software may be worth $50 or $200 to somebody. For me to personally train them can cost many times that amount. With a pre-made tutorial, this can be sold to any number of people for no additional cost per person. The more I sell, the more I make. I think the trick would be to find products and price points that are attractive to people. If I make underwhelming tutorials that are too expensive, no one will buy and I will make nothing.
Of course, selling a tutorial for $50 or $200 can also be a challenge in and of itself, as there are copious amounts of free information out on the web if you have the time and willingness to learn. Most people know how to type a search into Google.
The problem with free information on the web is knowing who to trust and knowing who to go to when things don’t go as planned. I aim to amass enough tutorials and advice, in one comprehensive and trustworthy place, allowing anyone starting out a business to be confident that smallbusinessdoer.com is a go to site.
If you visit a site like http://www.myownbusiness.org/ it contains a free online course on starting up a business. There is also courses provided by the SBA – U.S. Samll Business Administration – a US government site that gives some quick free courses as well. Those sites provide broad overviews of the different items to consider when starting a business. To make my site unique and useful, I plan to take that broad overview of how to start a business and give practical tutorials and guides on how to accomplish those business tasks.
There are sites like lynda.com that do provide software tutorials for a lot of popular software. Their expertise lies more in the area of creative professionals, so there are a lot of tutorials for photo editing, web design, video, programing, etc… There are business related tutorials as well on software such as Microsoft Office and Quickbooks. My plan would be to have tutorials that are business related. If there are sites, such as lynda.com that have existing tutorials that would be as good as what I can offer, I would point to those websites as opposed to recreating the wheel.
The key, I think, will be that focus on business related tutorials as opposed to trying to compete on providing tutorials for a broad market like software tutorials.
There are a lot of products that I use that I would like to give demonstrations and tutorials for:
An additional and alternate option to making money from tutorials is to make money off of giving tutorials for products with affiliate programs. An affiliate program would basically give me a cut of every sale made as a result of someone clicking on my link to a product. The product wouldn’t cost any more to the customer. It is basically the same thing as a referral fee.
My focus, howerver, would be on giving tutorials and advice based on what is the most useful to the people that visit my site, not what offerst an affiliate program or the best referral fees. To be trusted, I want to offer unvarnished opinion on different products and ideas that I find useful to business owners. Most of the products and ideas I do cover probably won’t have any monetary reward for me. For those produts and ideas that I cover that do happen to have an affiliate program, that’s when and where I’ll get some money that will make up for those non-paying pieces of information that I give out. As an example, there is no affiliate program where I could earn money from referring people to Google or WordPress.
Risks
They are still the same. Gaining awareness is something that takes a while.
What do you do question?
I have a hard, hard time answering this. I can’t do it confidently. I need to figure this out for that “elevator pitch“.
Contingency Plan
Ummm… This isn’t applicable anymore. The first way to look at failure was to not make $4,000 a month in revenues for the 2011 year. In 2010 I already averaged $5,533 a month in revenues.
In the contingency plan I talk about the prospects of selling the business. At the current state, the business would not be able to be sold as most of the business comes from contracts based on my relationships with people and companies who hire me based on my unique skills.
Key Financial Assumptions
No major new equipment purchases will be made. If they are made, they will be financed and expensed over two to three years.
New equipment purchases were made. The biggest investment was getting DSLR equipment, which is still cameras that can be used for beautiful HD video. DLSRs are starting to transform the video industry with the quality of picture that can be achieved from these relatively inexpensive pieces of equipment.
I went with this investment to stay on top of my game and produce quality videos for a great value.
Marketing expenses will not need to increase significantly in order to increase sales.
This is wrong, kind of. Most of my marketing spending probably didn’t result in any increase in sales for 2010. For 2011, I’ll have to wait and see how everything pans out.
Video vs. Business
Initially, revenues were to be approximately 50% video production income and 50% other business services income. It ended up being 65% video production income, 35% other business services income. In 2011 this figure will probably be even more skewed towards video production income.
Video Production Income vs. Other Business Income
Projected Income more than One Year Out
I won’t do a detailed income production for 2012, as I can’t give an honest prediction without feeling that I’d be writing total BS. I can say that I believe it will be at least as high as 2010.
Profit & Loss – Budget vs. Actual for 2010
Profit and Loss - Budget vs. Actual - 2010
Profit & Loss – Budget for 2011
Greg Lam Consulting 2011 Budget
Updates
- Check out the next update Growth Action Plan January 2011 – Do or Die
- Check out the previous update December 2010 business plan update
- Check out all the updates
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