Today marks the start of Women’s Small Business Month. At IAW, we’re constantly focused on the challenges that women face in their professional journeys as well as their accomplishments. During the month of October, we join other national organizations in highlighting resources for and the achievements of women business owners.
According to the State of Women-Owned Businesses Report for 2018, there are currently 12.3 million women-owned businesses, which employ nearly 9.2 million people and generate over $1.7 trillion in revenues.
“This new data demonstrates not only the remarkable impact women entrepreneurs have on our economy when it comes to creating jobs and generating revenue, but also the growing role of women-owned businesses in our communities. Over the past 11 years, we’ve seen women’s entrepreneurship and economic impact increase—especially among the growing number of women-owned companies that generate more than $1 million in revenue.”
— Julie Tomich, SVP, American Express Global Commercial Services.
While women are clearly making strides in launching successful businesses, we know that they still face obstacles along the way.
- It’s a well-documented fact that female founders receive less venture capital funding than their male counterparts.
- The gender pay gap persists; women are typically paid just 80 cents for every dollar paid to men.
- Women face pressure to “do it all” and often balance their business endeavors with parenting, household duties, and more. It can be difficult to find balance and set boundaries for oneself.
The Challenges of Starting a Business
Women who overcome the obstacles of launching a business will come face to face with the challenges of starting, launching, and growing a business. While many people love the idea of not having a boss and working for themselves, they underestimate the amount of time and energy a business will consume.
Before starting a business, you need to consider:
- The amount of money you will need to fund the initial launch and what it will require to keep your business running every month. A business plan can help you estimate the financial elements of your business and demonstrate how you will make a profit.
- Establishing the correct legal documentation and support for your business.
- How you will keep your business running: What efforts will you launch to help notify customers and leads about your business and promotions? Your network is a valuable resource, but a marketing plan is essential!
- The opportunities available to grow and scale your business.
Essential Tools and Resources for Your Small Business (The Toolkit)
This year, we’re determined to help more women dream, rise, and lead their way into successful business ownership.
Tune in for eChapter on Tuesday, October 2, where host Tanya Memme will be joined by two experienced business owners to give tips, advice, and resources that will help you be a better business owner.
In addition, over the next four weeks we will launch a series of posts as part of our small business owners toolkit. This will include:
- Developing a Business Plan & Finding Funding
- Legal Speak & Managing Finances
- Marketing Essentials
- Using Your Network and Scaling Your Business
Bookmark this page and check back every Tuesday during the month of October for updates to the Business Owners Toolkit!
Part 1: Developing a Business Plan & Finding Funding
A brilliant business idea is one thing. A plan to execute on it is another entirely. As your initial ideas start to take shape, it’s important that you spend time mapping out plans to determine whether your idea is financially sound. Can it make money? Is it sustainable? How much competition are you up against?
A business plan can shed light on the key elements required to run your business. It can help you understand how much money is needed to kick-start it. It can map out the resources you’ll rely on to operate the business both now and a year or two into the future. And most importantly, it will show how you will profit from your efforts over time. Let’s take a closer look at what a successful business plan looks like and how it will help segue to find funding.
Market Research To Define Your Customer
Before you can translate your business idea into an actionable business plan, you need to know who you are targeting and what they are looking for. This is a multi-stage process that requires you to have a keen understanding of several important areas, including:
- Your Target Market: Who is your target audience, what are they looking for in a solution, and how are they being served right now?
- The Needs of Your Ideal Customer: What specific pain points, questions, or concerns do your target customers voice?
- Your Ideal Customer’s Perception of You: Through surveys and informal research, what do people think of your solution? Is it a long-awaited new product, or something they didn’t know they needed?
- Your Competitors – Who is already servicing these pain points and how do you compare to them? What is your advantage and unique selling proposition?
Writing a Business Plan
A business idea tells you little about how your business will operate. There are dozens of factors that will influence the structure of your business, the resources you leverage, and your day-to-day activities. Whether you approach a bank or an angel investor, or attempt to crowdfund your business, you need a very clear plan in place so people know not only how you’ll repay them, but also that you understand the challenges that lie ahead.
Start with an Expert-Developed Template
To ensure your business plan has everything you need, start with a template and adjust accordingly over time. IAW member Katrina Brittingham joined us for some eCoaching in September and shared a great template that covered the major components of a successful business plan. IAW members can access this resource here.
Build to What You Need for Funding
Who you approach for funding will ultimately determine the complexity of the business plan you need. If you’re preparing a seed round and will be meeting with venture capitalists, your business plan needs to be extensive, providing an in-depth analysis of your market and its current providers, marketing plans for building a business, and your long-term financial projections.
If you are self-funding or don’t require large startup funds, you can probably begin with a simpler business plan. Having a plan in place is still highly recommended for providing a structure and a reference point to return to every quarter in order to evaluate performance, but a 40-page document analyzing the market may not be necessary.
Building a Business Plan that Works
With a template in place and an understanding of your audience, it’s time to build your plan. Here are some of the most important elements that need to be included in any business plan being used to acquire funding:
- Identification of Market Opportunity – Identify the industry, outlook, target market, pricing targets, and your niche within that market here.
- A Clearly Defined Marketing Plan – Here you identify your target audience, map out your unique selling proposition (USP), and identify your metrics for success.
- A Rundown of Your Team and Everyone’s Role – Share details about your organizational structure and information about the owner(s) and their business background – and about anyone else you’ve already onboarded.
- Competitive Analysis – Find out who your competitors are and gather information about their market share and the opportunity remaining. What is your competitive advantage?
- Financial Statements – Include your sales forecasts, balance sheet, income statement, cash flow statement, operating budget, and break-even analysis.
- An Executive Summary – This short 200- to 400-character introduction summarizes everything that’s important. It includes a simple one-line pitch, a rundown of your audience and general marketing strategy, and the key elements someone would need to know before investing.
Read more about the 6 Steps to Building a Business Plan in IAW’s guide to preparing a business plan that gets funded.
Calculating Startup Costs and Funding Options
The purpose of a well-structured business plan is to secure funding for your business idea. There are several elements that need to be carefully outlined in your financial statements and projections to ensure you not only get that funding, but that you get the right amount of funding to be successful. These include:
- Startup costs, including capital investments such as equipment, property, and vehicles;
- Operational costs, such as staff salaries, building rent, and day-to-day expenses;
- Marketing and sales expenses. If you’ve reached the point where you believe your business is ripe for growth, you’ll need an ample budget to invest in new marketing channels;
- Product development. Depending on your product or service offering, you’ll need to invest in continuous improvement to stay relevant in the market.
There are many ways to leverage investments into funding for your business. Whether converting a side hustle into a full-time business or introducing new funding for an existing business, some of your options include:
- Grants – There are several grants for women-owned businesses depending on your offering and location. Read a list of potential options here.
- Loans – You can get a loan through the bank directly or backed by the Federal Small Business Association (SBA).
- Venture Capital – These are investors who help surface and support startups with large infusions of cash, depending on your stage. The trade-off is that they often want a substantial say in your operations.
- Angel Investors – These are independent investors who trade partial ownership of your company for the funds necessary to get to the next level.
If you have the resources and your business has sufficiently low overheads, you may be able to go it alone and bootstrap your business. Just be sure that your business plan is comprehensive enough to account for all expenses so that you don’t fall short on cash in the early stages of your business launch.
Part 2: Legal Speak & Managing Finances
It’s not the most exciting part of running a business, but legal and financial components are among the most important. Without the proper filing in place and structures implemented to manage your finances, you face unnecessary risks in running your business.
To avoid your falling victim to an unexpected contract dispute or a surprise tax bill, let’s take a closer look at the key elements of a successful small business and how to ensure that yours is set up properly well before issues arise.
The Correct Filings for Your Business
If you haven’t considered the legal structure of your business yet, now is the time to do so. There are several different business types that can be beneficial in different situations. They include:
- Sole Proprietor – A sole proprietor is someone who operates a business in their own name with no additional legal structure around the business. Some states have filing requirements for sole proprietorships. Many just label you as a sole proprietor if you never file otherwise.
- Limited Liability Company (LLC) – An LLC involves a formal legal agreement that helps protect individual business owners and the owners’ assets. For tax purposes, earnings are passed directly through to the LLC members, so there are no corporate taxes.
- Partnership – A partnership is a means by which to split ownership of a company and maintain the legal and tax benefits of an LLC.
- Corporation – A corporation is considered a separate entity for both legal and tax issues. There are strict reporting rules, but you can gain additional benefits if your business fits the recommended model.
- Not for Profit 501(c) – There are several strict requirements for not only forming but also running a non-profit company. If you are considering such a move, do some in-depth research in advance.
Choose the structure that makes the most sense for your business type, taking into account the number of principals, future investment needs, and the way you plan to pay yourself and manage finances.
If you are preparing to create a new business, it’s recommended that you consult at least in part with an attorney who has experience in your state of operation. You can find the legal forms required on most state Department of Revenue or Secretary of State websites, as well as supporting documentation on LegalZoom to help with business arrangements.
Protections for Your Business
The next steps are dependent on the type of business you operate. Based on your industry, market, and the types of goods you service or sell, you may need additional permits and licenses to operate in your state. Some considerations include:
- Licensing and Permits – Almost all retailers (regardless of whether they are brick and mortar or online) are now required to collect sales tax in the states they sell goods to. In addition, if you are selling food or beverages, you’ll need specific permits. Other licenses and permits may relate to shipping goods or services that you offer. Your municipality may have additional requirements on top of what your state asks of you.
- Intellectual Property Filings – If you are producing goods or media, you’ll need to protect them by filing for intellectual property protections. This includes trademarking new names, logos, or collateral, and copyrighting original works related to your business. At the same time, it’s important that you research your use of any logos, business names, or elements that could be used by other companies.
Based on the types of goods and services offered, your location, and the customers you serve, there will be several issues to address in starting your business. Research them carefully in terms of your state and its requirements in order to avoid any surprises down the line.
Your customers trust you to provide safe, reliable goods and services. While you will do your best to offer just that, there will be instances in which problems arise. If someone slips and falls on your property or a former client is unhappy with the results of the services you provided, you could face exceptional costs that put your company at risk.
Business insurance comes in many forms to protect against these potential liabilities, as well as damage and loss that could interrupt your operations. Consider insurance for the following:
- Health, Life, and Benefits for Employees – To attract top talent, you’ll likely want to offer some form of health insurance and related benefits to your future employees.
- Liability Insurance – This comes in many forms and the exact policy you get will depend on the risk your business takes on. Some industries may even require you to carry a policy specific to that industry.
- Business Interruption – If your business cannot operate due to theft, damage from natural disasters, or other unforeseen situations, insurance can provide a valuable stopgap as you get back up and running.
- Data Loss and Security – Now more than ever, it’s recommended to hold some kind of policy in the event of a data breach that exposes your customers’ personal information.
It’s difficult to know exactly what types of insurance makes the most sense for any single business. IAW partners with Newtek to offer our members a free insurance evaluation and consultation that helps confirm if current coverage addresses all potential liability and loss, that you aren’t paying for excessive coverage you don’t need, and that you’re paying a competitive rate for your policy. Sign up for an evaluation to get started.
Managing Finances for a New Business
Finally, there are finances. This is an area that solopreneurs often have difficulty with. Particularly when there are no partners or employees receiving a full-time salary, it’s easy to let personal and business finances commingle and to create issues that could have a negative impact on the future of your business. Some things to consider include:
- Separating Your Finances – Create a new set of bank accounts for your business in which all incoming and outgoing funds are processed. Any lines of credit, savings accounts, or other financial needs should be managed through accounts set up in the name of your company.
- Paying Yourself a Salary – When and how much to pay yourself can be difficult to figure out. Many entrepreneurs forego salary altogether while others try to maintain the status quo they enjoyed in their prior job. Assuming you have steady cash flow and your business is supported, pay yourself a salary that takes into account not just your monthly expenses, but the additional tax burden that self-employed individuals must manage.
To set yourself up for long-term success, spend time evaluating your business’s needs, what you can realistically live on, and how to invest your revenue strategically for the future.
Part 3: Marketing Your Business Effectively
Effective marketing can make the difference between success and failure for a small business. When your network is small, your client list still growing, and your cash flow sporadic, there is nothing more important than a steady stream of new prospects and clients.
With small business failure rates as high as 50% in the first five years, you need every edge you can get. Marketing, through digital tools, in particular, can make the difference between a slow stumble out of the gate and explosive growth in the first few months.
Marketing and branding to get new clients are among the most important topics to IAW members – a core element of small business entrepreneurship. To help, we’ve collected some of our most valuable resources below to guide you through some of the biggest challenges faced in this process.
Tracking Your Marketing Efforts
Before you invest anything, spend time establishing the tools and KPIs you’ll use to measure the results of your efforts. There is nothing more frustrating than pouring money into a black hole, hoping for success but having no means by which to measure what works and what doesn’t.
Some of the most important things you can do to ensure that you are accurately tracking your efforts include:
- Installing Google Analytics – Google offers a free tool that can track unique visitors to your website, segmented by source, landing page, and activity. You can connect it with Google’s advertising tools as well in order to measure the effectiveness of your ad spend. It’s highly recommended that you install it as soon as you launch a website.
- Measuring the Impact of Marketing Spend – Whether in a spreadsheet that tracks what you’ve spent and how effective that spend is in generating results, or in a marketing and sales automation tool like SalesFusion, Salesforce or HubSpot – make sure you are measuring your spend and the influence of individual marketing activities on generating new sales.
- Measuring Specific Channels – Use tools that allow you to measure the effectiveness of your efforts directly. When posting to social media, use a third-party tool with separate analytics like Buffer or HootSuite. For emails, use MailChimp or ActiveCampaign to track your campaigns. The more you can measure the effectiveness of individual efforts, the better those efforts will perform over time.
Learn more about some of the easy marketing tools you can implement to get started.
Building, Maintaining and Using an Email List
Email has a median ROI of 122%, higher than that of most other channels. Even after two decades of advanced technology and new distribution channels, the most effective remains the direct connection you maintain with your prospects.
But, for it to work well, you need a system in place to build, maintain and use your email list. There are three core steps to building an email plan that works:
- Start Collecting Emails – Is your website designed to collect email addresses from all visitors? Are you just asking for contact form submissions? Implement top of funnel conversion points such as eBook downloads, webinar registrations and newsletters. This can increase your conversion rate by as much as 150% and start filling your list much faster.
- Implement an Email System – Select a tool like MailChimp that can help you create, distribute and measure the success of your emails. All campaigns should be sent in a way that can be easily tracked depending on the activity of your users.
- Test Your Content – Test the effectiveness of your subject lines, body content and other materials as often as possible. If you can split test them to a large enough list, do so. If not, watch your open and click rates to see what works. Ideally for warm leads, you want an open rate of 20% or higher and for cold leads, 10% or higher.
Learn more about how to build an email list that will help you grow your business now and in the future.
Marketing Your Business Online
Email is often the best digital tool to generate immediate ROI, but an effective digital marketing plan will leverage several additional tools that make up parts of your digital presence. These include:
- Website – Build a website that speaks to your target audience as much as possible. Design should be mobile friendly, load quickly, and contain sufficient conversion points to get people into your marketing funnel at a rate of 1.5 – 2%. You don’t need a $5,000 design to do this. There are many templates on sites like Themeforest or SquareSpace to accomplish this, while you focus on content.
- SEO – Search engine optimization consists of two elements – the factors on your website that influence how the search engines view the technical structure of your content and the links you generate off of your website. Follow best practices when building your site to ensure that it meets what search engines are looking for, and then actively distribute your content to build new links that will drive traffic.
- Social Media – Be active on all social media channels that resonate with your target audience. For B2B marketing efforts, LinkedIn should be at the top of your list, while consumer-focused efforts will rely on a mix of Facebook, Twitter, YouTube, Instagram, and other more direct tools.
This can be a lot of work. It takes time and significant effort to build an effective web presence, and you’re already running your business, which is a full-time job and a half. Outsourcing can help you leverage time and get more from your efforts. Upwork offers access to more than 12 million freelancers from around the globe who can take on the technical or design tasks you don’t have time for.
Download our guide to marketing your business online to learn more about the power and effectiveness of digital marketing.
Building Your Personal Brand
As time-consuming as it can be, one of the most effective marketing tools you have is yourself. A personal brand is a unique resource that no one can replicate. With the right investment, you can turn your expertise into a valuable resource that helps you grow your business. Benefits include greater credibility, recognition and prestige for your thought leadership; higher perceived value when people engage with your business; increased career opportunities and upward mobility; and rewarding partnerships that can turn into new business opportunities.
To effectively build a personal brand, you need to understand your target audience, the competition that is trying to reach that same audience, and the value proposition you are offering to that audience in turn. Some of the core areas in which you should invest include:
- Your professional bio – Your bio should feature professional-grade photography, a tight, economically worded description, and customized content based on your audience.
- Social media profiles – Create social media profiles not just for your business, but for yourself on all the core websites including Twitter, Facebook, LinkedIn, Instagram, YouTube, SnapChat, Pinterest, and Reddit.
- Business cards – Business cards remain a core element of all personal branding efforts. Get a discounted order from VistaPrint through our partnership with them here.
- Thought leadership – Publish content that is relevant to your audience on both your own blog and those owned by thought leaders with large audiences that overlap with yours.
- Video content – Record video content in the form of webinars, short video blogs, or recordings of your speaking engagements at local conferences.
- Testimonials and references – Gather feedback from past and current colleagues and clients.
- Your overall digital presence – Your website, blog, speaking engagements, media relations efforts, email marketing, and other efforts like video production, and podcasting can all have a positive impact on your efforts.
Leverage your personal brand to build new relationships and support the consistent growth of your business in our eBook here.
Part 4: Using Your Network and Scaling Your Business
Networking is a core element of any successful business. Without it, you will struggle to meet people, acquire clients, and generate interest in your products or services. But unlike most other components of a strong business, there is no single right way to network.
How you build your professional network will largely depend on your background, the colleagues you know, and your goals. One thing that everyone can and should do, however, is to establish sound best practices for networking.
With the right mix of mutually beneficial relationships, you can build a network of people who are there for you when you need an introduction or recommendation, and in turn, you will do the same for them. Let’s look at how networking can help you take advantage of new opportunities and scale your business.
The Core Components of Successful Networking
Networking is a mindset. It’s more than just attending weekly mixers after business hours. It’s about targeting and building relationships that can help all parties involved. For that reason, you need to establish some building blocks before you can be truly successful. This means:
- Understanding the Timeline – Swapping business cards doesn’t mean you have an instant connection you can leverage the next time you need something. These things take time. Foster relationships, help where you can, and when you need it, you’ll have access to support.
- Target the Right People – Collect 200 business cards and all you’ve done is create hours of work entering them into LinkedIn. Smart networking is hyper-targeted – that is, it’s focused on fostering relationships with people who complement what you are doing.
- Be a Giver – Don’t walk into a networking event trying to make sales or gain referrals. Always approach these relationships with a mindset of giving. How can you help them? This will be your biggest differentiator.
How to Network Successfully
For most people, networking is hard. It just is. It requires you to step out of your comfort zone and meet new people on equal footing, often with little or no introduction. You have to take a leap to be successful, but there are several things you can do to make it easier, including:
- Practicing – Spend time practicing your elevator pitch, either alone or with close friends and colleagues. When someone asks “What do you do?” have a ready-to-deliver answer in your back pocket.
- Starters – Carry a list of ready-to-use questions to initiate and carry a conversation. Things like “What do you like about your job?”, “What makes your company better?”, or “What are the upcoming trends in your industry?”
- Location – Look for local meetup groups where the same people interact on a regular basis. One-off events can introduce you to people you might otherwise not meet, but meetups bring with them a level of comfort that few networking groups offer. Similarly, local trade and networking groups can help you connect with like-minded individuals.
- Friends – Don’t be afraid to leverage your existing network of friends and colleagues, even if they are in different industries. You never know who might know someone whom you can help or vice versa.
- Social Media – While not a complete replacement for traditional networking, social media is an immensely powerful tool you should use whenever possible. Build an All-Star caliber LinkedIn profile (read more on how here), diversify your business profiles on Twitter and Facebook, and comment on everything you read to create new interactions with potential colleagues. Whenever you meet someone in person, follow up online as well.
Creating Opportunities within Your Networking Group
To have an impact on your business, you need to not just build your networking group, but nurture it and work with it to extract value. In our eBook, 8 Steps to Build a Powerful Professional Network, we outline five things you should do every month to get more out of the time you spend interacting with people in a networking setting:
- Find a Local Networking Group – Make it a priority to find a group you can regularly attend. Meetup.com is effective, but your local IAW chapter can be even more so.
- Attend a Minimum Number of Events – Aim to attend at least two events every month across your local group and other industry-specific meetups.
- Set Goals for Each Event – Don’t just show up and wait for people to come to you. Set a goal to meet a certain number of people and have a certain number of conversations at each event you attend.
- Build New Relationships – Engage with people and walk away knowing what your next step will be. Whether it’s to introduce them to someone already in your network, send a message on LinkedIn, or await their follow-up, have a plan.
- Always Give Value – Endeavor to give value to those you meet, in whatever way you can. What can you offer to make it worth their time to have a conversation with you?
Leveraging Your Network to Scale Your Small Business
Networking has many potential benefits. One of its greatest, however, is the impact it can have on your small business. There will be many times when you need something for which you don’t have a source. Whether it’s a skill you lack, a resource you are short on, or a connection you want to make, your network can serve as an important bridge to future success. Some examples include:
- Hiring Employees – Hiring is expensive, time-consuming, and emotionally exhausting. Entrepreneurs spend hours reviewing resumes, interviewing candidates, and worrying about whether someone is the right fit. Through your network, you can receive personalized recommendations, helping reduce the tension and shorten the time to hire.
- Outsourcing Tasks – You are good at a lot of things, but not all things. Outsourcing allows entrepreneurs to leverage the concentrated expertise of a select few individuals in areas like development, design, copywriting, and finance. One of the quickest ways to find a reliable, quality freelancer or service provider is to ask your personal network.
- Financing Growth – While you likely won’t tap individuals in your network for financing, they can be a good way to connect with angel investors, VC firms, bankers, or private investors who would be a good fit when the time comes to scale your efforts. Knowing someone who knows someone can help eliminate many of the barriers in an already lengthy, obstacle-filled process.
Professional networking is one of the cornerstones of successful entrepreneurship. Do it right and you’ll always have a colleague, friend, or contact you can message with questions or requests. Invest in it the same as you would any other part of your business and you will reap the rewards for years to come.