Businesses That Plan Ahead May Have a Better Chance of Accessing Billions in New Small-Business Loans, Study Says

A recently reissued study reports that business plans can make the difference between getting and not getting a loan, or securing investment capital.

The small-business legislation that President Obama recently signed into law was good news for small businesses looking to access a newly established $30 billion loan fund.

It’s even better news for small businesses who took the time to complete a business plan, according to the results of a recently reissued June 2010 study conducted by researchers affiliated with the University of Oregon Department of Economics.

The paper found that companies completing business plans were twice as likely to successfully grow their business, get investment capital, or land a loan. Researchers examined data on nearly 3,000 users of business plan software.

"The bottom line is that completing a plan correlated with increased success in every one of the business objectives that came up in the study," said Tim Berry [pictured], founder of GoodBiz113 ad partner Palo Alto Software, and author of the business planning software Business Plan Pro.

The news comes at a time when the Small Business Administration estimates more than a half-million businesses fail annually.

Despite the tough climate businesses are facing, there are loans available for small-business owners -- many of them at record-low interest rates. But with less capital available, more companies are fighting for a smaller piece of the pie, and smart businesses are finding that it pays to be prepared with a plan. With talk of a double-dip recession and other uncertainty clouding the air, business planning has become less a one-time event and more of an ongoing process, business experts say.

"It is important to remember that business plans are living documents," Berry noted. "Those who take the time to complete a plan, follow it, and update it often are most likely to be successful."

Patricia Schaefer, of BusinessKnowHow.com, cites lack of planning as one of her top seven reasons why small businesses fail. And in a challenging business environment, completing a plan properly is just as important as having a plan in the first place.

"[A plan] must be realistic and based on accurate, current information and educated projections for the future," she writes. "Many small businesses fail because of fundamental shortcomings in their business planning."

The Oregon study looked specifically at planning completed, using business plan software. Researchers Eason Ding and Tim Hursey -- who prepared and presented the paper as part of the requirements for their honors degrees, under the supervision of professor Joe Stone -- looked at a questionnaire answered by 2,877 respondents. Of those people, 995 had completed a plan, and:

* 297 of them [36 percent] secured a loan
* 280 of them [36 percent] secured investment capital
* 499 of them [64 percent] had grown their business.

The study found that, among firms of varying ages, the amount of business planning was related to success. Ding and Hursey also found that Web-based firms had "a significant correlation of success with business planning."

The study did not examine differing rates of success between individual firms. Across the board, businesses completing plans scored higher -- suggesting that, with the right planning, craft beer brewers or tattoo parlor owners could achieve success as readily as lawyers or medical professionals.

Results suggest that business planning "is highly correlated with subsequent successes for a variety of firms," the paper states.

About Palo Alto Software
Palo Alto Software Inc. helps people succeed in business. It develops, publishes and markets software products for small businesses and entrepreneurs.

Its suite of products includes Business Plan Pro, the best-selling business-planning software in the U.S.; Marketing Plan Pro powered by Duct Tape Marketing; Email Center Pro; and their newest product, Start, Run & Grow Your Business. Email Center Pro is Palo Alto Software’s first SaaS product, an online e-mail management tool for small businesses.

Palo Alto Software also runs a website network, which includes http://www.bplans.com/ -- one of the highest-trafficked business planning content sites in the world. Its website network receives approximately 1 million unique visitors per month and offers users unique, valuable content and free business planning tools.

Tim Berry, the founder of Palo Alto Software and a co-founder of Borland International, is a recognized expert in business planning. His popular Planning, Startups, Stories blog is featured on AllTop Small Business. He also writes the Up and Running blog for Entrepreneur.com and contributes regularly to Business in General, All Business, the Huffington Post, and other publications.

For more information, visit http://www.paloalto.com/ or call [800] 229-7526.

SOURCE: Palo Alto Software Inc.
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Palo Alto Software Releases New Marketing Plan Pro Powered by Duct Tape Marketing®

As students head back to school, small-business owners are revving up their enterprises. Need help? Good news! GoodBiz113 ad partner Palo Alto Software, in partnership with small-business marketing guru John Jantsch [pictured] of Duct Tape Marketing, just announced the release of its new Marketing Plan Pro powered by Duct Tape Marketing®.

In this latest release of Marketing Plan Pro, Palo Alto Software has taken the award-winning Duct Tape Marketing methodology and embedded it into Marketing Plan Pro. The result: a product that will guide users through the process of creating a powerful marketing action plan that will help them understand how marketing and advertising can help grow their businesses.

Marketing Plan Pro powered by Duct Tape Marketing -- the best way to write a successful marketing plan -- is all-new for 2008. Small businesses often struggle with marketing strategies, and how to put an action plan in place that will actually grow their sales numbers. Marketing Plan Pro will give any business a clear plan to start working from, and get them started on creating a winning marketing strategy in just 30 minutes.

Your First Marketing Plan -- Within 30 Minutes!
Creating a marketing plan doesn't have to take months. In fact, Jantsch recommends starting with the simplest marketing plan outline, and then returning to add detail as implementation of your marketing plan progresses.

Marketing is a system, not an event, and Duct Tape Marketing is a systematic approach to marketing that is as elegantly simple as that sticky and trustworthy roll of duct tape. The Duct Tape Marketing system shows customers how to develop and execute marketing plans that will give businesses life and longevity. Audio introductions narrated by Jantsch are also included for major topics.

This new version of Marketing Plan Pro will help you:
* Build your marketing vision to identify your business goals.
* Focus on action, not words.
* Find your customers.
* Identify your remarkable difference and help figure out how you stack up against your competition.
* Forecast sales and budget expenses.
* Publish your plan securely online.
* Present your plan in style.
* Track your progress.
* Get free books [including a copy of Jantsch's own bestseller, "Duct Tape Marketing"] and more!

“It’s been exciting watching my Duct Tape Marketing system go from blog to book to software,” said Jantsch, creator of Duct Tape Marketing. “Merging my system with Palo Alto Software’s Marketing Plan Pro software will make this methodology available to anyone wanting to see their business succeed. The 30-minute plan will allow anyone to get from plan to action immediately.”

“Working with John Jantsch to bring Marketing Plan Pro powered by Duct Tape Marketing to market has been a great experience for Palo Alto Software,” noted Sabrina Parsons, CEO of Palo Alto Software. “Our Marketing Plan Pro software still employs the core elements that have always made it a great value — including the step-by-step approach that guides users seamlessly through the process of creating a marketing plan that will be immediately available for use and get results.

“Palo Alto Software’s collaboration with John Jantsch and the Duct Tape Marketing system will be nothing short of remarkable for new and repeat customers, and we are very proud to bring this version to market.”

Learn From the Best in Class
Marketing Plan Pro and Duct Tape Marketing are both widely recognized as the best solutions in their class. Among their accolades:

“If you're going to market with a new product or service, Marketing Plan Pro will deliver all of the professional documents that you need to plan your launch.” -- Entrepreneur Magazine

“Marketing consultant and entrepreneur John Jantsch has earned a large following among small-business owners... He dispenses tips, strategies and tactics to help entrepreneurs expand their businesses.” -- BusinessWeek

Practically speaking, summer's over. Now, focus on growing your business!

Marketing Plan Pro powered by Duct Tape Marketing is available as an instant online download or on CD-ROM [download included] via Palo Alto Software. All Palo Alto Software products come with a no-risk, 60-day, no-questions-asked, money-back guarantee.

SOURCES: BusinessWeek, Entrepreneur, Palo Alto Software
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Bipartisan Entrepreneurial Development Bill Expands Opportunities for Women- and Minority-Owned Small Businesses

Late yesterday, Senators John Kerry [D-Mass.] and Olympia J. Snowe [R-Maine, pictured] introduced comprehensive legislation to promote far-reaching entrepreneurial development programs. In particular, the bill expands women and minority small business ownership opportunities by boosting Small Business Development Centers [SBDCs], Women’s Business Centers [WBCs], SCORE, and other programs. It will also help reduce regulatory burdens on small firms.

“Investing in these core small business assistance programs will help create jobs in our state," noted Kerry, chairman of the Committee on Small Business and Entrepreneurship. "In Massachusetts alone, SBDCs served over 8,500 entrepreneurs last year, and our Center for Women and Enterprise has generated 15,000 jobs over the last 10 years. These programs will not only help our entrepreneurs succeed today, but they will build the next generation of small business owners, too.”

“By investing in assistance and development programs that create small business opportunities for women and minorities, we are paving the way for all Americans to improve their entrepreneurial skills,” said Sen. Snowe, ranking member of the committee. “This legislation is critical to providing the necessary tools to expand and promote small business ownership, and create the necessary jobs that all Americans rely on.”

Many of the provisions in the Kerry-Snowe bill unanimously passed the committee last Congress. Specifically, the bill:

* Reauthorizes and expands key small business counseling and assistance programs like SBDCs, WBCs, and SCORE;

* Improves the WBC grant program through streamlined paperwork and increased oversight;

* Promotes greater consultation between the National Women’s Business Council, the Interagency Committee on Women’s Business Enterprise, and WBCs;

* Creates a Native American small business development program, an Office of Native American Affairs within the Small Business Administration [SBA], and a Native American grant pilot program to foster increased employment and expansion of small businesses in Indian Country through business counseling services;

* Seeks to address the small business health insurance crisis by creating a competitive pilot grant program for SBDCs to provide counseling and resources to small businesses about health insurance options in their communities;

* Establishes a pilot program to assist small businesses in complying with federal and state laws and regulations; and

* Creates a Minority Entrepreneurship and Innovation Pilot Program to provide competitive grants to Historically Black Colleges and Universities [HBCUs], Hispanic-Serving Institutions [HSIs], Alaska Native and Native Hawaiian Serving Institutions, and Tribal Colleges to create a curricula focused on entrepreneurship.

Sources: Library of Congress, U.S. Department of Education, U.S. Senate Committee on Small Business and Entrepreneurship
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Committee Seeks to Strengthen Key Initiatives for Sustained Economic Development

In many underserved neighborhoods, small businesses are an important engine of growth and revitalization, bringing much needed jobs and commerce. Oftentimes, the individuals wishing to start these businesses have difficulty securing adequate finances, leaving their aspirations stalled in the planning phase.

Today, the House Committee on Small Business examined two key initiatives that support economic revitalization in some of these disadvantaged communities: 1] the Microloan Program, and 2] the Program for Investment in Micro-Enterprise [PRIME] -- both of which fall under the purview of the Small Business Administration [SBA].

"There are many budding entrepreneurs who strive to open their own business, but due to a lack of experience or limited credit history, cannot secure capital," said Nydia M. Velázquez, committee chairwoman. "The microloan and PRIME programs have been instrumental in turning their dreams into reality."

Since its inception in 1994, the microloan program has provided credit to more than 700,000 small firms -- many headed by women, minorities and others who are facing challenges getting their ventures off the ground. These businesses have helped bring economic growth to areas where it is desperately needed, creating or retaining about 10,000 jobs in 2006, according to the SBA.

With a default rate of less than two percent, these investments have not only increased prosperity, but have done so while maintaining a better repayment record than traditional loans made by commercial lenders.

"These programs have been vital in moving people not just from welfare to work, but from welfare to business ownership -- an amazing accomplishment," Chairwoman Velázquez noted.

Despite this record of success, the Bush administration has proposed to eliminate the microloan program each year for the past four years. In its latest budget request, it has recommended increasing the cost of the loans for the borrowers, and to completely eliminate PRIME. At the hearing, members rejected these proposals and outlined ways to strengthen the current programs, making capital more affordable for borrowers.

Currently, microloan recipients cannot use their repayment history to improve their credit score. Building a strong credit history is a challenge for many business owners. By changing the current system, borrowers could improve their credit records, thus increasing the stability of their business and their ability to obtain future funding.

The committee also proposed reducing costs and providing greater flexibility, allowing lenders to better meet the needs of their clients. In striving for these goals, members seek to make loans more accessible for the next generation of entrepreneurs.

"For many aspiring business owners, a microloan is their only option, and we simply cannot allow these entrepreneurs to be left behind," Chairwoman Velázquez said. "The answer is simple: these programs must be permitted to continue, and any proposal to diminish them must be firmly rejected."

GoodBiz113's take: SBA's microloan and PRIME programs need to be sustained in order to help ensure that future businesses can thrive in underserved areas. Further, we'd like to see the changes proposed by Velázquez's committee embraced by her colleagues and the White House, and implemented ASAP.

Sources: PBS [file photo], U.S. House Small Business Committee
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Kerry, Snowe Call for Increased Investment in Small Business

Yesterday, John Kerry [D-Mass.] and Olympia Snowe [R-Maine], chairman and ranking member of the U.S. Senate Committee on Small Business & Entrepreneurship, respectively, introduced the Invest in Small Business Act of 2007. Its aim: To strengthen an existing tax incentive in order to promote innovation and entrepreneurship.

Set forth during the midst of National Small Business Week, this bipartisan bill recognizes the contributions of 25.8 million small businesses nationwide that pump $918 billion into the U.S. economy annually. It encourages private investment in small firms by making several key changes to section 1202 of the Internal Revenue Code of 1986.

That section currently allows individual taxpayers to exclude 50 percent for capital gains from the sale of eligible small-business stock if they have held it for five years. Kerry and Snowe's proposed legislation increases the number of taxpayers who will be eligible for the exclusion, and makes it more attractive for investors to support small businesses by increasing the exclusion amount and decreasing the period they are required to hold the stock.

"Entrepreneurship is what keeps America on the cutting edge of technological innovation,” said Kerry. “Many of our largest and most successful corporations once started as small businesses with big ideas.

"Today, small businesses can repeat the role they played at the vanguard of the computer revolution by leading the nation in developing technologies to reduce carbon emissions and curb global climate change. America’s entrepreneurs are already are at the forefront of these industries, and we need to do everything we can to encourage investment in small businesses.”

“As the engine of our economy’s growth, it is vital that we help small businesses access the resources they need to expand, thrive and, most importantly, create jobs,” said Sen. Snowe [pictured above]. “By increasing the exclusion for small-business stock to 75 percent and taxing non-excluded proceeds at regular capital-gains rates, this legislation would take a critical step toward promoting investment in small businesses.

"In addition, by eliminating the tax on stock gains attributable to small businesses located in Empowerment Zones, this bill would help generate jobs in our nation’s most economically disadvantaged areas.”

Specifically, the Invest in Small Business Act of 2007 strengthens section 1202 provisions by:
* Increasing the exclusion from 50 percent to 75 percent;
* Decreasing the holding period from five to four years;
* Repealing the capital-gains exclusions as an AMT preference;
* Taxing the non-excluded portion of section 1202 gains at the regular capital-gains rate, which is currently 15 percent or 5 percent for individual taxpayers;
* Allowing corporations the benefits of section 1202 -- but, to be eligible, a corporation cannot hold more than 25 percent of the stock of a qualified small business;
* Providing a 100 percent exclusion for gains from the sale of small-business stock of corporations located in an Empowerment Zone; and
* Increasing the asset limitation from $50 million to $100 million.
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