Elana Fine, managing director of the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business, took questions from readers last week. Here’s an excerpt.
Do I need a business plan?
Q. How important is it to write a business plan? If I am not looking for a loan or investment money, do I really need one?
Elana Fine: We’ve actually been encouraging entrepreneurs to use planing tools such as the Business Planning Canvas or other simple tools before writing an entire business plan. This type of tool really helps you identify your value proposition, target customers, key partners, etc. before spending the time to write a full plan. This is where you determine the feasibility of an idea and how you will start.
Web or brick and mortar
Q. I am noticing two trends lately: some businesses are closing their brick and mortar operations and moving online, and some online only businesses are opening brick and mortar stores (e.g. Buy Buy Baby). What would you recommend for a boutique stationery/paper goods store? Online only, brick and mortar, or both?
Elana Fine:If your business requires a lot of customer service and will rely on walk in traffic, you still might need a physical location. For a stationery or paper goods store I think it really depends how you will differentiate from the competition — if it is on price and variety — you may be able to build a business online but if you are providing guidance/advice on invitations or other customized goods you might better serve your customers either from a home office or a brick and mortar store.
Q. How do you suggest cutting through the clutter of the digital ad world to promote my business? My sales are down and looking for ways to improve.
Elana Fine: Social media and digital advertising can often be inexpensive ways to attracts users and customers — but you need to think it through strategically versus just spray and pray. You need to really identify your target demographic and where you will find them online. Building a social presence can take time. Experiment with social media and advertise on sites in small tests and then see what is most effective.
Q. Do you have any recommendations for software or any other tools, apps or gadgets that could help entrepreneurs brainstorm or think through business models, financials etc.? Seems in this day and age there should be more than the old business plan and excel spreadsheet.
Elana Fine: I’m a big fan of the book “The Business Model Generation” which includes an interactive business planning canvas (actually a great iPad app). There are other tools and methodologies such as Lean Launchpad that help guide through the venture creation process. Best thing to do is also bounce your ideas off as many people/potential customers you can to get feedback on whether they’d buy your product.
Diversifying from writing
Q. For the past two years since I was laid off, I have been doing freelance writing (nonfiction articles, pretty specialized stuff). With the rise of content mills and the “all information should be free” expectation, I’m pessimistic about my long-term ability to support myself. How do I go about trying to figure out what else I can do to make money? Should I try to reboot myself as a corporate good-grammar coach, or try something else entirely?
Elana Fine: Writing has become commoditized — however the use of the Web now requires organizations to create a lot of content and put a lot more information online. There may be opportunities to help organizations with their Web sites or taking internal information and repackaging in a more digestible online format.
Women in Business
Q. Any specific advice for women looking to start a business? I have three young kids and am afraid I cannot do both.
Elana Fine: I know a lot of women who have initially started their businesses in their home so they can still be close to their kids. Identify a few successful local entrepreneurs and pick their brain about how they started and balanced their various obligations. I’d also say build a great support system of friends and family who can help pitch in while you get things started.