In your quest to develop your business plan you will want to obtain information regarding industry analysis, legal and regulatory statutes, manufacturing, training and counseling, and maybe corporate financials and international information and data. This is just a few of the areas you can research through our government’s online resources. Though they are free and free is often synonymous with undervalued they are indeed not free. Your tax dollars pay for them and the information is rich and vast. These government resources are put there to help you succeed so there is no better place to start your research than with the resources you pay for. The U.S. Census Bureau, Department of Commerce, Small Business Administration, Internal Revenue Service, The State Department, FedStats, Export.gov, and the U.S. Securities and Exchange Commission all have information that you will find helpful. I will talk a little about each one, what they do, and how you can use them.

The first place you may want to start with your investigation on industry analysis is through The Department of Commerce. The DoC is comprised of twelve separate agencies responsible for many things regarding business from weather forecasts to patent protection. Their mission statement states exactly what they do and there is no better way to sum it up, “The DoC touches the daily lives of the American people in many ways, with a wide range of responsibilities in the areas of trade, economic development, technology, entrepreneurship and business development, environmental stewardship, and statistical research and analysis.” There is much to the DoC and they also are a portal to several other government agencies and partners that you may find useful.

The U.S. Census Bureau, a derivative of the DoC, is a great resource for industry analysis and they are arguably the most important branch of the DoC for demographic information ranging from population breakdown, income, education levels, and housing to name just a few which you can find in the Peoples and Households section of their website. The Census Bureau also collects massive amounts of data on economic activity. You may need to search the industry code for the particular type of business you’re in or looking for, by searching its NAICS code. You can break information down from a national level and/or by zip code for information on total number of businesses as well as types and average sales in their business and industry section. They also have information on foreign trade and so much more. The fact of the matter is that there is so much data that the U.S. Census Bureau has accumulated it may seem daunting. It is in fact a huge database with so many useful links that I have to write three paragraphs about all the different links worth noting. You should spend some time navigating around, taking notes, and leaving yourself a trail of breadcrumbs one way or another so that you can remember just how you got from place to place.

The U.S. Census Bureau’s website is vast, as I previously stated, and there are a number of portals you should know a little about and even bookmark. Censtats is a database that includes county and zip business pattern information, international trade data, demographic and economic data for states and counties, Census Tract Street Locator, and some other databases on top of those. American FactFinder has information regarding demographic information about people that can be broken down in many ways to suit your needs. QuickFacts provides information on people, business, and geography which can be targeted on a national, state, and/or county level. If you need information on industry and manufacturing you can skim through the Current Industrial Report section. There contains vast amounts of information which may satisfy your needs for market analysis, forecasting, and decision-making.

The next noteworthy online resource at your disposal is the SBA or Small Business Administration. If you need information on federal and/or state legal and regulatory information the SBA has important and detailed information on these two important issues. The SBA also funds and supports business’s and you can find and apply for government grants, contracts, as well as sign up to receive training and counseling from SCORE. Score are a group of retired executives that volunteer their time to help business owners and aspiring entrepreneurs with development of their business plans and give advice to current businesses management dilemmas and questions and other assistance. If you have never spoken with a SCORE representative you should. They have a plethora of experience and expertise on a variety of subjects and industries. The SBA’s website also offers you a place to register your business, find business licenses, and permits. Ultimately the SBA is another great government resource that is a must-add to your toolbox.

If you’re interested or need to get your hands on international data and statistics our government provides information through U.S. Census Bureau, The State Department, and Export.gov. The Census Bureau’s contains an international database (IDB) that provides rankings by population size as well as global trends and demographic data. The State Department’s website has background information that includes information on each country’s economy and a great deal more all in alphabetical order by country. You can find out information on that country’s history, people, government, relations, travel, and more. Export.gov’s slogan is helping U.S. companies succeed globally by combining and providing the resources from across the U.S. government to assist American businesses in planning their international sale’s strategy. They have in-depth data about markets and industries on a global scale.

If you need information on corporations The U.S. Securities and Exchange Commission’s Edgar Database provides information regarding corporation’s financial information as well as their operations. There is a lot more to the Edgar Database. They also have a user guide that will provide you a more detailed analysis of who they are and what all they can do for you.

The last government resource that is worth mentioning is Fedstats. FedStats is a government sponsored website that has vast quantities of data collected by over 100 different agencies. You can search by topic compiled in a nice, user-friendly A-Z format or you can search the agencies in which they receive their data from, also in an alphabetical format. If you’re interested in state-by-state statistical data you might try clicking through FedStat’s MapStats section which profiles states, counties, cities, congressional districts, and even federal judicial districts. Besides the particular places I have pointed out there is also information on international comparisons, statistics from the individual agencies, press releases, and more.

I have written a similar article on my blog that has the full list of links to many of the areas that I have spoken of in this article if you would like to check it out. I hope that I have provided you valuable resources that will aid you in your pursuit to complete your business plan. Good luck and best wishes for your success!

In my consulting experience, I often come across managers and entrepreneurs who seek advice on hotel budgeting process. Now that we are towards the end of August, the process for many of you must have already begun.

Sometimes however, I get alarmed when I hear someone raise a question mark on the very need for a budget or their ability to cast one. Typical doubts that you hear are, “do we really need a budget?”, or “how can I look into the next twelve months and put a number to it? Well my answer to these questions is always very simple “Yes we do” and “Yes you can, we will work on it together”

It is a fact that the budget process for any period commences at least six months prior to the start of the period. As an example if your plan period is January 1st to December 31st, you would start the preparation of budget assumptions around the month of July of the previous year. From that point of view, I really sympathize with those who are yet to sharpen their forecasting skills. But the job has to be done. They better start learning it. From my experience of being involved with the budget or business plan process of some of the most reputed and efficient international brands during the past over four decades, I have finally settled on a process with rolling budgeting for the twelve plan sub-periods, month after month.

The process is quite simple and once the team gets involved with it, their perception on entire the process, needs changes. They start appreciating the plan as their tool, as a guide to help them show the path and above all, since the numbers are churned by them, they start owning the numbers. This is the magic of the system.

The process starts with a very simple exercise completed by all functional heads of revenue producing departments. They do a forecast of anticipated revenue from their respective departments. Rooms, Food, Beverage and Recreation and services departments. The forecasting is done in some details so that their assumptions for the numbers could be interpreted and rationalized. The marketing functional head gives his or her inputs in explaining the existing and anticipated market scenario for the plan period. This document, once completed will just give the total revenue that the hotel expects to generate in the period being planned.

The next exercise is now with the hotel’s financial functional head. He evaluates the numbers to see if these would be enough to meet the expenses and generate enough surpluses to meet the ownership’s financial objectives. The general manager evaluates the numbers to ensure that they are real enough to be achieved and yet challenging enough for the team to give their optimum inputs. However if the numbers do not look good, or look too easy, the team goes deeper into their respective revenue and cost areas to optimize their operating efficiencies.

Once these numbers are agreed and signed off the actual process of plan consolidation starts. The numbers are put in month by month format and summed up for the year. This is called as Plan Year I. For the subsequent two years or plan year II and III, the numbers are simply extended on the basis of an agreed growth rate which is determined after taking into considerations factors like the market, the competition the economic environment and so on, that were likely to impact the business.

The advantage of this process over a simple budget process is many-folds. While on the one hand it gives you the targets for the next plan period, it also gives you the mid and long term business objectives in the form of targets for the following two years. This not only helps the team to plan their operating strategies but it becomes the most important tool to determine hotel’s long term marketing strategy.

So a budget is a tool that defines the financial targets in terms of revenues, rates and volume utilization for all areas, be it rooms, food & beverages or recreation and services. It spells out the variable and fixed costs, the contributions and the bottom line. It basically defines where one would like to see the business in each of the next three years. Now comes the most interesting aspect of the exercise. Having decided where to go, it is now the turn to define the path to take, or in simple terms, “how” to achieve the budget. That interesting exercise my friend is called the “marketing plan”. Without a well thought out, researched and action oriented detailed marketing plan, it will be impossible to achieve the budgeted targets. Your three years rolling plan and the marketing plan, together is what we call as the hotel’s business plan. A comprehensive document that tells you where to go and how to go. It is as simple as that.

Here let me remind you that simply preparing documents and keeping them as show pieces will not do wonders. It is the action taken in implementing the plan that will convert the numbers into reality. As we go along implementing the plan we have to put into place a strong system of operating reviews, variance analysis and action steps to deal with them, month on month, re forecasting the business for the following three months on an ongoing basis so that we could simply avoid any surprises, whatsoever, at the end of each review period, be it month, quarter or the year. You can see the magic? How easy it would be to budget the next plan period, the process will simply roll into the period as you keep forecasting on a rolling basis, year on year.

I had never imagined a better way to befriend numbers, and you know what? They are not only my friend, they talk to me, they speak to me, we follow each other and they tell me what to do next. Numbers speak only the truth; they could be your best friend too. Befriend them… start listening to the number music.

A lot of people dream of starting their own business. They have heard of the “unlimited opportunities” and the “complete freedom” and the “not having a boss”. If you are one of those who have that dream and believe it really can come true then I have something to say to you “WAKE UP!”

When you start your own business you don’t have ‘complete freedom’. As a matter of fact there’s a really good chance that you will have less freedom, a lot less freedom. To be successful you will most likely be working seven days a week and you will be working longer hours and you will be working for a lot less money (at least in the beginning). Does it still sound like something you really want to do?

As far as ‘not having a boss’ goes, well I hate to be the one to break this to you but you will always have a boss. If you don’t do what the customers want then you will go out of business and if you are lucky enough to borrow money to start and run your business then your banker/investors will be telling you a lot about how you are going to run your business. Okay so maybe they aren’t your ‘boss’ but they are still the ones who will tell your what you must do. And that’s what your current boss does now. Does it still sound good?

Of course you can be stubborn and do what you want instead of what the customers want and there’s a word for business owners that do that. They are called employees because they went out of business and had to go back to work for someone else. Still interested in starting your own business?

I’m going to assume at this point if you are still reading, that you are interested in starting your own business. Don’t get me wrong, I have started lots of companies and had a lot of success. Over a period of ten years I actually sold two of my companies to a Fortune 50 company for a LOT of money. At that time a lot of my friends commented on how lucky I was for that to happen. I just smiled and didn’t respond to those types of comments. You see, they only saw the end result of a lot of really hard work and a lot of really long hours working seven days a week. They didn’t see the failed marriage, the teetering on the brink of not being able make my payment to the bank. They didn’t see me working for free with no salary at all for weeks and weeks. They didn’t see me having to take money from my personal checking account in order to meet payroll. Yep, I sure was lucky.

When you start your own business you don’t see things like those I just mentioned. If you are serious about starting your own business then you have heard that you must have a ‘business plan’ to take to the investors. Well, I have looked at lots and lots of business plans over the years and for the most part they were all worthless. People who want to start a business tend to see the world through rose colored glasses. For example when they get to the part on the business plan where they are to assess the competition nearly everyone completely under estimates not only the number of competitors but the strength of the competitors too. People who are convinced that they want to go into business for themselves tend to operate with blinders on. I’ve seen people come up with some really outlandish things in the ‘Competition Analysis’ of a business plan.

Failure to properly analyze the competition is one of the most common flaws I see in start-up business plans. Here’s an example: I had a gentlemen come to me (as a potential investor) with the idea of starting his own Lexus repair shop. He had been a mechanic for over 15 years and had all of the ‘industry certifications’ and had been through all sorts of courses and schools on how to diagnose and repair just about anything related to Lexus automobiles. He had no experience in how to “run” a repair shop but that’s the subject of another article.

Here’s how brief recap of how the conversation about competition went:

Me: “What about your competition, who are they? Him: “There really isn’t any”. Me: “What? How do people get their cars repaired now?” Him: “Nearly everyone takes their cars to one of the local dealerships for repairs. I can do it a lot cheaper than the dealerships because I will not have all their overhead.” Me: “So there are no independent shops that work on Lexus?” Him: “There are some independent shops but they are so small that I wouldn’t consider them real competitors.” Me: “So why are they so small?” Him: “I think their prices are too high.” Me: “Are their prices lower than the dealerships who are doing the majority of the work now?” Him: “Yes. The independent shops are almost always a lot cheaper than the dealerships.” Me: “So maybe the independents are so small because people who own a Lexus are not swayed by lower prices. After all they paid a lot for their car. Maybe they are not as price conscious as you think.” Him: “I can do the same work for 30% to 40% cheaper, how could they not be interested in that?”

Can you see what’s going on here. This guy was convinced he could do it better, faster and cheaper than anyone else. Yet the facts as he presented them showed that the customers he wanted to go after were not easily persuaded by the “cheaper price” argument which happened to be what he wanted to use as his unique selling proposition.

One of my favorite sayings when talking to people about their business plans is “Don’t confuse me with the facts because my mind is already made up.” A business plan is supposed to get people to think. To do an unemotional analysis to see if there really is a viable opportunity there. But too many of them will do all sorts of mental gymnastics to justify their position. I don’t care what type of business you are thinking about starting, there is competition out there. Don’t kid yourself.

Another big problem I see in business plans is a lack of management experience. Here’s another real world example. I had a ‘friend of a friend’ ask me to meet with a friend of theirs. It was a woman who had the idea of starting her own “cookie bakery”. She didn’t have the funds necessary and was coming to me as a potential investor. I agreed to meet with her. One of the very first questions I asked was “Where did you come up with the idea of starting your own bakery”? She said that for years she had baked cookies and she had lots and lots of people tell her she should start her own bakery. These people (mostly friends and family) said she baked the best cookies they had ever tasted. She had brought some to our meeting and to her credit, they were very good.

When I asked her about her experience in running a bakery she told me she had never actually worked in a bakery. As a matter of fact, she had been a secretary up until the birth of her second child and had taken 6 years off. Now that the child was going to school, she was ready to “go into business for myself”.

Out of respect for the friend who had asked me to meet with her I didn’t quickly end the meeting as I normally would have. Instead I took some time and asked her some questions. My goal was to try to get her to stop being emotional and to only analyze the facts. A few of the questions were:

• “Have you picked out a location?”
• “Do you have any idea what the lease will be?”
• “How much will it cost to renovate to get it ready?”
• “How much equipment will it take?”
• “Can you lease it or do you have to buy it?”
• “Where are you going to get your customers?”
• “How much is the insurance going to be?”
• “What about liability insurance in case someone claims your cookies made them sick?”
• “Where are you going to get your customers?”
• “How are you going to advertise?”
• “How about utilities?”
• “How much will it cost you to make a single cookie?”

She stumbled through most of her answers and in exasperation said “You don’t seem excited about this idea”. She said she was really excited about the idea and was hoping I would get excited to. I told her I get excited when the companies I have invested in are making a lot of profit.

The meeting was going nowhere and I couldn’t get through all of her emotions so I told her to get all of the information together then total up the monthly expenses with no salary for herself and come back and tell me how many cookies she needed to sell everyday just to pay the bills. She told me that as the owner she should get a salary. I agreed and said your salary will be paid from the profits so your income is virtually unlimited. Just put the numbers together and give me a call when you can tell me how many cookies you have to sell everyday just to pay the bills.

Guess what? I never heard back from her. I was the one who rained on her parade with a harsh dose of reality.

It takes a lot of courage to go into business for yourself. It’s not for the faint of heart and requires a 100% commitment. And in the beginning it requires you to take a realistic look at the facts without deluding yourself. If you are going to present your business plan to anyone else with the hopes of having them invest in your new venture, you better be ready for some really tough questions. The best way to prepare yourself for those types of questions is to not kid yourself when working up your business plan. As a final note don’t EVER tell a potential investor that there is no competition. They know better.