There are nine key sections to the business plan: Executive Summary, Market Analysis, Company Description, Organization & Management, Marketing & Sales Management, Service or Product Lines, Funding Requests, Financials, and an Appendix.

The Executive Summary is the most important section and should provide a short synopsis of the entire plan as well as some history of your company.  I recommend completing the entire plan before writing this section.  This section should answer questions such as:

• ·         What kind of company do you have?
• ·         Who are your primary customers?
• ·         What are your short and long-term goals?
• ·         How many employees do you anticipate having? What key metric will drive this anticipatory rate?
• ·         Who are the leaders of the organization? What experience do they have and how will that experience be leveraged in this enterprise?
• ·         If you are seeking funding, how much are you looking for?

Following the Executive Summary should be a Market Analysis.  It is imperative you understand who your competition is and know everything there is to know about the market you are entering.  If you are creating a new market or are in a new market, relate the similarities to another industry’s beginnings.  Remember to be realistic as the only person you will be fooling is yourself.  Knowing who your customers are and how your competition acts will be a key component in advertising and marketing your product.

The Company Description & Organization & Management sections should speak for themselves.  Discuss what type of company you are, LLC, S-Corp, C-Corp, LTD, LLP, etc… What is the company about, the mission statement, goals, and the purpose the company ultimately serves.  Then discuss the Organization & Management, how these individuals were selected for the position they are in, and the experience they have to excel in this position.  The Organization & Management section can be a critical section for investors because well respected leaders and managers can make all the difference during key growth stages.

The Marketing strategy should elaborate on four key points: market penetration, growth, channels of distribution, and communications.  There is no right or wrong answer to your strategy in this section.  Marketing is always evolving and changing and so are your customer’s demands.  This makes marketing an extremely challenging fixture for any business.  However, this section will help you and the investors understand your outlook on marketing and make your strategy relevant to your business.  In addition to the four key points mentioned above this section should discuss sales force and sales activities.

The bread and butter of your business plan is the Service or Product Line(s) section.  This tells the investors the benefit of what you are selling.  Be sure to focus on the benefit of your product to consumers and not necessarily all of your actual products.  If you are a hosting company, or aspiring company, and offer Shared, Reseller, VPS, Dedicated, and Co-location, you do not need to break down each specific product and what they are.  You should talk about the added benefit and services each of these products will feature.  The market summary should help the readers understand more about the actual products you’re offering and the basics behind your products and/or services.  In addition to touching on the added features or services describe the products or services from a consumer point of view, what stage of development that product or service is in, and the benefits of your product or service and the ability to meet consumer needs.  It is also beneficial to list what separates you from the competition in this section.

The Financials & Funding Request section should be relevant, within scope, and not be an extreme.  The previous sections laid out who your company is and where you want it to be.  This section should discuss the financial implications of getting there.  It is important to discuss what your current funding requirements are, future requirements over the next five years, how these funds will be used, and any long-term strategies you plan to implement that would have a significant impact on funding or cash flow.  Always discuss time frames and what the funds will be used for.  Once you have listed your requirements and requests be sure to include the justification for it.

The second portion to the Financials & Funding Request section should include prior Financial statements such as three to five years’ worth if you have them.  It is imperative that your Financials match your funding request or else you will immediately project inconsistencies in your plan.  Remember investors are used to looking at charts, graphs, and pivot tables, don’t forget to be creative and capture the attention of the reader.

Lastly, finish up the business plan with your Appendix.  This section is not included with the submission of your business plan and usually is requested by investors.  This section shares credit history of your business, resume of key executives and employees, pictures of your products or recommendations of your services, letters of reference, details of your market studies and their sources, relevant articles or references to your business plan, software or any other license, permits, or patents, copies of leases, building permits, contracts, list of business consultants, including attorney and accountants.

Be sure to remember who and where you sent your business plan and appendix.  This is the key to your successes and failures.

For further analysis of the Business Plan please see my September 2011 blog entries on YIPFolio.com.  For any questions or inquiries please send an email to Doug.

Doug C. is a Financial Analyst for a top 20 Fortune 500 Financial Services company and owner of YIPFolio Financial & Management Consulting Services. He specializes in Financial & Accounting services including balance sheet, P&L, fixed assets, and capital funding. He has spent several years in the Hosting and Technology industry while consulting management and senior management on all aspects from raising capital to managing daily cash flow. Doug received his BS in Finance from Fairfield University and resides in the Greater New York City area.

                          

We had a few important requirements that ruled out many competitors like HootSuite and TweetDeck. They work really well for smaller teams, and even larger ones in certain situations, but for us they just wouldn’t work. The thing we loved about CoTweet was the inbox and outbox; we could see all messages directed to us, and about us, allowing us to easily engage our audience. This also allowed us to assign certain team members to handle specific conversations, and topics, which they were well versed in. Another requirement of ours, was that we wanted to avoid using a desktop application, which signed directly into Twitter. There’s issues with accountability (i.e. who said what?), but also, many of us telecommute and use multiple different devices to stay in touch with social media, so we really wanted a hosted application in order to avoid multiple installations.

That’s when Sprout Social popped up on our radar, and I think I can safely say, we’ve been in love ever since. With an elegant, easy to use dashboard, that not only allows us to easily stay in touch with our followers, but also learn about them, and their interests, Sprout Social is the perfect application for us. Further, it even gave us the ability to take advantage of some unique tools, like Facebook and bit.ly integration, that we previously weren’t used to.

While Sprout Social isn’t a free application, it does have a 30 day free trial, and monthly plans start at $9 a month, something we’d glad to pay as it makes our lives tremendously easier. If you’re struggling with social media collaboration tools, Sprout Social gets a thumbs up from us!

                          

The first step towards getting started with the move is determining the platform to host your site on. Unless there is a significant detriment, such outdated software, or unreliable hosting, we typically suggest keeping the platform the same. This will prevent unnecessary path changes in the configuration of your wordpress site, or other stress inducing changes. With the vast majority of shared web hosting companies using cPanel to provide their platform, the migration can be fairly easy without many complications, as VPS.NET offers a turnkey cPanel VPS Hosting solution.

In the event that you’ll be migrating to a new platform, whether it be a different control panel or a completely different operating system, we’ve come up with an outline of some of the key things you’ll need to watch out for.

1. The path to the configuration file will likely change, resulting in an unusable site.
2. The MySQL database and/or usernames may be laid out differently, making it so your site cannot connect to the database server.
3. Different chmod settings; depending on the platform, you may need to set the read/write file attributes to a specific setting for it to work properly.

The second step is to upgrade your existing wordpress installation to the latest and greatest version. After the upgrade, make sure that all existing plugins have been upgraded, if necessary, and are still functioning properly. By confirming their functionality on the existing installation, will prevent potential unnecessary troubleshooting with your new hosting. If your install is already up to date, nice job, you can skip this step.

To keep things fresh and tidy, we’re going to use a completely new installation on your new server. If you have something like Fanastico, Installatron or Softaculous installed on the server, you can use their one click installation tools. If not, you will need to manually install WordPress on the server. This can be done by downloading the latest installation at www.wordpress.org.

Next up, we’ll need to download the content of your blog so we can restore it on your new server. To do that, simply login to your website using your favorite FTP program — we typically recommend something like FileZilla, but with so many out there, it’s really up to personal preference. You’ll want to download the wp-content directory, and then robots.txt and .htaccess files, as these will also have site-specific customizations that you have made. Once you have downloaded them, you can login to the new server using your FTP program, and  instead of pointing the FTP program to ftp.yourdomain.com, you can point it to the IP address. Simply over write the existing files, from your new installation of wordpress and you’ll be good to go.

Since we have the static content copied over, we’ll also need to grab a backup of the database. Login to the PHPMyAdmin on your website, and choose to export your current wordpress database. While using the PHPMyAdmin export option, select ALL the tables, and choose to save as a file to your PC. Once the database has finished downloading to your local PC, we can now import it to your new server. Open up PHPMyAdmin on the new server, and choose the database you installed wordpress to. Once there, select the import option and choose the export that you downloaded to your PC from your old host.

Now that we have all your content copied over, we can change the name servers for your domain registrar. Most customers who are using VPS.NET will be able to use our Anycast DNS servers, allowing them to use dns1.vps.net and dns2.vps.net. If you have chose to setup your own name servers, you will need to use them to point to your web server.

Once you have confirmed that everything is functioning properly on your new WordPress VPS Server, you can cancel the account with your old web host. If you do run into any trouble with migrating your WordPress site to VPS.NET, please do contact us — we’d be happy to help!

                          

In order to understand how you are going to fund your business you better understand what your financing needs are in addition to the types of options that will be available to you. Money, or capital, not only helps your business get off the ground but keeps the business sustainable. Some options that exist for your business entail borrowing money, using business versus personal finances, and other eligible business assistance.

In my experience most young companies entertain the idea of either equity financing or debt financing. Equity financing is money that is raised by a company in exchange for a share of ownership. This is not limited to publically traded corporations but is a viable option for all facets of business. Obtaining equity allows a business to obtain funds without incurring debt, or simply put, without having to repay a specific amount of money at a particular time. Equity financing can come from a plethora of sources including friends, relatives, employees, customers, industry colleagues, or non-professional investors. The most common equity finance contributors are venture capitalists.

In contrast to equity financing, debt financing is borrowing money that must be repaid over a period of time, usually with interest. This debt can be short-term, which is fully repaid in under one year, or long-term, repayment is due in excess of one year. The difference between equity and debt is ownership. With debt financing the lender does not gain ownership interest in the business, and the return on investment is tied to interest payments. In general debt financing requires some collateral to guarantee the repayment of the loan and interest. If you are an LLC or private corporation the lender can ask for a personal guarantee in case of default in addition to the collateral placed against the loan. This tactic is used to mitigate lending risks as well as ensure the borrower has sufficient personal interest at stake towards making the business succeed.

After funding and sustaining your business operations the next question is always tied to making money. One key question I am often asked by startups is, “When will I start seeing profits?” The answer to this question lies in the breakeven analysis. This tool is used to determine when a business’s revenue will outpace its expenses, which is also known as, making a profit. In order to determine this extensive research should have been conducted on start up costs. Generally speaking this can be obtained from the business plan (if you do not have a business plan it would be beneficial to begin there). Knowing what your expenses are going to be will inform you of the sales revenue you need to cover those expenses. In addition to market demand this should help set a guideline for pricing of your products as well. For established businesses or business units, to calculate the breakeven point, identify all of your fixed and variable costs.

Fixed costs are typically referred to as overhead because they are needed to run the business but not attributed to sales volume. For example, rent, administrative salaries, telephone lines, and other non-sales volume related expenses are considered fixed costs. Variable costs are just the opposite and are tied directly with sales volume such as additional servers, increased bandwidth, and disk drives. Knowing your fixed and variable costs will help determine how many unit sales are needed and how much to sell them for to breakeven.

For example, if it costs $25 to create one virtual private server, and there are fixed costs of $1,000, the break-even point for selling the Virtual Private Servers would be 40.

(If the price of each server sold was $50), 1,000 (fixed cost) / (50 – 25) = 40 Virtual Private Servers.

Revenue = $50 x 40 units sold = $2,000 | Fixed Cost = $1,000 | Variable Cost = $25 per unit sold = 25 x 40 = $1,000 | Net Income = Revenue – Expenses or $2,000 – $1,000 – $1,000 = 0 [Break-even].

In the same analysis, selling 41 virtual private servers would be the point of profitability. 41 VPS x $50 = $2,050 – $1,000 – (25*41) = $2,050 – $2,025 = $25. Undercutting or underestimating your variable and fixed costs is only going to undermine the integrity of your analysis. Be sure to include realistic figures and be able to support how you derived these numbers. Many investors will pick this analysis and ask you how you plan to get to the number of units needed to break-even. If you have any questions please feel free to contact Doug@YIPFolio.com.

Doug C. is a Financial Analyst for a top 20 Fortune 500 Financial Services company and owner of YIPFolio Financial & Management Consulting Services. He specializes in Financial & Accounting services including balance sheet, P&L, fixed assets, and capital funding. He has spent several years in the Hosting and Technology industry while consulting management and senior management on all aspects from raising capital to managing daily cash flow. Doug received his BS in Finance from Fairfield University and resides in the Greater New York City area.

                          

Gross margins, which can also be referred to as gross profit margins, by definition is a company’s total sales revenue minus its cost of goods sold (COGS), divided by the total sales revenue, expressed as a percentage.  The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company.  Obviously, the higher gross margin percentage the more a company retains on each dollar of sales.

For example, if Company XYZ were said to have a Gross Profit Margin of 25%, it would retain $0.25 from each dollar of revenue generated. Strong gross margins vary between companies and industries depending on the service or product being provided.  However, keep in mind gross profit margins do not translate directly into net profit.  The gross margins are generally put towards capital expenditures and operating expenditures, including general and administrative expenses.

One of the first analyzes I put forth with my clients always relates to profit margins and knowing what your COGS are in comparison to your net sales (or earnings capacity for new company’s).  In close to ten years of industry experience around the Hosting Industry I find many new companies and founders tend to overlook Accounting and Finance principles.  Two very important concepts assets and liabilities and net profit can be found on two separate financial statements that should always be viewed by senior management.  They are the P&L, or statement of net income, and the balance sheet.

The balance sheet is a financial statement that summarizes a company’s assets, liabilities and shareholder’s equity at a specific point in time.  It is the best depiction of what a company owns versus what it owes.  In translation to the hosting industry this can be viewed as leasing a server from a reseller versus leasing space in a data center and purchasing servers.  In most US GAAP scenarios the expense of purchasing new server and co-locating it would be pushed to the balance sheet and depreciated over the useful life, typically three to five years.  On a month-to-month operating lease, that same server [as an example] costs $500 at your local reseller is shown on the Statement of Net Income or P&L (profit & loss statement).  If the cost of that server to purchase is $5,000 and the useful life three years, the P&L would receive approximately $140 a month in depreciation expense versus $500/mo for data processing and data center expenses.  Granted additional upfront costs and other fees apply; further analysis is required to understand which model, operating leases or ownership, works best for you.  Keep in mind separate business models and key management philosophies can determine whether purchasing assets or leasing them is best, not just in terms of upfront capital costs, but also from a maintenance and support perspective.

The P&L statement  summarizes the revenues, costs and expenses incurred by your company during a specified period of time. Generally speaking profit centers and corporations report quarterly whereas cost centers look at monthly P&L’s.  This statement shows the ability of a company to generate profit by increasing revenues and reducing costs.  A good measure of company growth is not always looking at the bottom line and seeing the fluctuation of profits but rather the increase in sales.

Doug C. is a Financial Analyst for a top 20 Fortune 500 Financial Services company and owner of YIPFolio Financial & Management Consulting Services. He specializes in Financial & Accounting services including balance sheet, P&L, fixed assets, and capital funding. He has spent several years in the Hosting and Technology industry while consulting management and senior management on all aspects from raising capital to managing daily cash flow. Doug received his BS in Finance from Fairfield University and resides in the Greater New York City area.

                          

Outside the high life of running VPS.net. I’m a father to my daughter, a husband to my wife and a convenient source of food to 5 cats, 3 guinea pigs and a dog. I enjoy gaming with Skyrim taking up far too much of my free time. My new years resolution is to learn to play the piano which so far has got me unto playing 3 Blind Mice. Of course by Xmas 2012 I will have a top 40 chart hit

Your resume says you’ve got a bit of experience in hosting, want to talk about that?
Many years ago I started hosting using a bit of software called User Mode Linux which was a precursor to today’s virtualisation platforms.  In that time I’ve seen resources go up, prices go down and technology just growing by leaps and bounds. The things that are being done with clouds now-a-days we couldn’t even image a few years ago. Whatever the future holds its going to be an exciting time to be in the industry.

What kind of tricks have you got up your sleeve for VPS.NET and its customers?
Well we’ve got some lovely new HP Sans rolling out in Q1 as well as a few new funky products and offerings. I can’t say too much currently as they are still under wraps but they are going to be fantastic offerings for the entire VPS.net and UK2 customer base. A little sneak preview however is that this year we are aiming for new locations with Europe being our first stop in the first 3 months of 2012. For the other 9 months well you will just have to wait and see.

Where do you think Cloud Hosting will go in the future? Is it a niche product or something that the mainstream is moving towards?
Cloud is going from a new thing to just the way things are done so soon cloud hosting will just become hosting as it becomes commoditised. The new big thing will be the way we interact with the internet. Most people consider their phones to be a device but if you
take that device, add on augmented reality, 4G connectivity you get the ability to have a virtual realm hooked into the real world. The ability to just look at a building using a smartphone and then it pulls up a full HUD of information isn’t that far off. Taking things
being integrated even further with the screen being a contact lens, hooked up via a fast wireless connection to your smartphone opens up possibilities that we can only barley in visage today. Cloud will provide the infrastructure, while the smartphone will deliver the experience.

                          

If you’re sitting on a hot new idea, why not start the process? Even if you’re not in a position to take the full commitment, it’s easy to start up as a side project. VPS.NET can register the domain, and from there you’re able to build an inexpensive website using something like Drupal or WordPress with our cloud hosting option.

While we know that starting a business certainly isn’t easy, there are many motivating factors to at least start the risk. In today’s economic climate, there’s really not much to lose. If you’re not happy where you, and your business gains a little traction, things could get much better for you. If you’re in a position with advancement opportunities or job hunting, the skills you learn from launching your new online business could be those same skills that a potential employer is looking for.

So, what do you have to lose? If you’re ready to take the risk, we’re here to help.

                          

With a little motivation from our Twitter mafia, we decided we’d go all out this time. We’re going to give you a FREE node FOR LIFE! Even better, there’s no limit to the amount of participants. This means everyone is eligible, and able to win. It’s like at the carnival; a winner every time!

We couldn’t make this too easy – we do have to somehow fund future contests. That’s not to say we made it hard. To get a free lifetime node, you simply need to make a post about your experience with VPS.NET. It can be good, bad, or even ugly — we’ll appreciate all, and we’re happy to give away a free node as a thank you for the work you put into it. Of course, there are a few more requirements.

1. Each review must be at least 300 words. While we love one-liners, we prefer those be kept at the comedy club. Thoughtful and thorough reviews are much better for us.
2. In order to get the free node, a link to the review must be posted to either a Twitter account or Facebook profile, with VPS.NET notified. You just have to make sure you CC us on Twitter or tag us on the Facebook post.
3. The reviews must be posted between October 27th, and November 15th in order to qualify for the free node offer.
4. That’s all!

                          

iSSH – Definitely the favorite SSH client for use on the iPad, though it does come with a price tag of $9.99. The best part about it, is the easy to use cut and paste option. It sounds a little funny to be doing cut and pasting in SSH, but we’ve found it to be quite useful.

NiceTrace – Diagnosing network issues is a breeze with NiceTrace. It gives you constantly updating trace route information, allowing you see where any delays might be.

CamCard – We often find ourselves being the spotlight of conferences, having business cards literally thrown our way. It sometimes can get a little overwhelming. CamCard definitely makes it easy to keep track of business cards, having an easy to use scan utility, and it also exports to Excel files which is a big help. Things like the LinkedIn integration are very cool too.

Data Usage – The app doesn’t do much besides monitor your data usage, but lets not downplay the importance of that. Going above your monthly limits can be quite expensive. It has a number of notification methods that can be used to alert you when you reach pre-defined thresholds and if you go over your monthly limit.

ShoeBoxed – We’ve recommended this app before, but I can’t recommend it enough. I’m terrible at keeping track of receipts, making it quite difficult to get reimbursed for business expenses when away for conferences and meetings. ShoeBoxed is awesome, as all you need to do is scan in the receipt and it does the rest for you. It can even export to an excel spreadsheet, if you need it to. Fear Accounting no more!

Smart Keyboard – The biggest complaint we hear in the office on the iPad is the keyboard especially when being compared to Android. Smart Keyboard has the same great predictive text tools as Android, and at $1.99, it isn’t too much of a risk if the default keyboard annoys you.

Fuze Meeting – On the run yet have a meeting scheduled? Fuze Meeting is by far the best meeting app for the iPad. Not only are you able to attend meetings, but you can even contribute outside documents, like keynote presentations. If you’re real sly, you might be able to get way with attending a meeting while at the beach, without the boss knowing you’re not even at your desk.

Pulse – Burnout is awful; one of the easiest ways we avoid it is by scheduling a few breaks to read the news, rejuvenating ourselves a bit. Pulse is definitely the favorite reading tool, allowing you to bring any news source necessary, as long as they have a RSS feed. With sharing capabilities on Twitter and Facebook, and allowing you to save articles to Instapaper, it’s the office favorite.

There are many other great tools out there – feel free to share your own! You might even see us using them at the next opportunity.