A successful business requires at least one leader. Leadership comes with commitment, consistency and the ability to persuade others to follow. A leader makes decisions and doesn’t give up when the going gets tough. Employees expect their leaders to be resilient and resolved.

However, leaders who refuse to admit when they are wrong, who delude themselves with self-justification and expect employees follow in blind faith, appear only arrogant and self-absorbed. These leaders soon find no one following, having lost all credibility with their previous followers by their refusal to admit when they are wrong.

Leaders can be so blinded by their need to be right that they see any evidence in a biased fashion, thereby confirming a wrong decision as being right. This is called cognitive dissonance and is something hard wired within us. In this case, followers see the wrong decision before their delusional leader. Depending on the time between followers recognizing the wrong decision and the leader finally admitting, the leader may lose a lot of loyalty and confidence of his followers.

While we can’t change the phenomena of cognitive dissonance – the wish to be right and therefore viewing evidence in a biased manner – we can recognize this malady in decision making and thereby more carefully review evidence. Leaders also need to listen to and encourage contrary opinions, evaluating the message rather than seeing it as an attack or lack of loyalty.

Resolve and commitment sometimes blind leaders. They resist a change in direction and guard against alternative ideas and evaluations. Good leaders admit when they are wrong, change direction and take responsibility. They earn far more loyalty and respect by simple admissions of being wrong without excuses or cover-up.

Authors Carol Tavris and Elliot Aronson explain cognitive dissonance in their book Mistakes Were Made but Not by Me, discussing how corporate America rewards positive results; mistakes demonstrate failure of results. This conditions leaders to avoid admitting mistakes and continue a failed course. Great leaders avoid this fallacy, knowing that trial and error makes better decision makers and accepting candid feedback often brings mistakes to the forefront before the business faces disastrous consequences.

Discussions on the mortgage crisis, grime economic news and the continuous mention of the “r” word (recession) by the media may leave entrepreneurs believing financing for businesses has dried up.

Not so says the New York Times Business Section. A recent investment conference in Southern California attended by 1,000 investors demonstrates that investment money is readily available, especially for clean energy, environmental, communications, water treatment and biomedical companies. Of the 330 companies represented, 50 came from China.

Plenty of Venture Capital

Less competition encourages investors who seek small, dynamically growing companies hidden from the broader investment market. James W. Montgomery, Chairman of Montgomery & Company, saw the same enthusiasm at a technology conference held by his firm in Santa Monica, CA. Montgomery said “There is plenty of capital around because venture capital hasn’t been in the bubble mode in recent years like real estate and debt markets.” Montgomery also mentions that companies providing entertainment and services for cell phones do well right now because the communications industry is hot.

Venture Capitalists are not throwing money around by any means. Many still remember the years of the Dot Com Boom and the resulting bust that left venture capitalists holding the bag. But companies with reasonable valuations with the potential for a nice return in two to three years find small amounts of capital for investment. Internet start-ups usually fall within this category because they don’t require expensive plants and equipment.

Green is the “In” Color

“Green” companies such as those that convert contaminated water into drinkable water, solar energy companies also attract investment funding. Investors aren’t just oriented on California, even Chinese companies in the technology field find US capital. Those getting the nod from investors include everything from steel finishing products for appliances to lithium-ion batteries.

Investors also look to acquire operating companies with great earning potential. Large companies expend millions researching companies to acquire and operate. With the down turn in private equity funds who often bid prices up on their reign of buying everything in sight, other investors believe prices have become more reasonable.

A successful business plan doesn’t get written overnight. First and foremost comes the all important foundation: research. Without a good foundation the business plan probably isn’t worth putting on paper. Your research provides the very basis for your projection of costs, expenses, sales and profit.

Business Market Information

Before you accurately project potential sales, you need market information. Who buys your products or services and how do you reach them? What are the preferred styles and colors, what doesn’t sell and why? What are the price points? At what point do you lose money and at what point does the customer stop buying. If you lower the price, how does that affect sales? Do customers for your products and services exist in your area? Is there room for growth? Is the market already saturated? Are there new technologies that will cause your products or services to phase out?

Collection of this information takes time, understanding and the wherewithal to extrapolate that which pertains to your specific market. No entrepreneur can plan for everything, but a detailed business plan exposes a lot of possible pitfalls. Researching and extrapolating data accounts for about 80% of the time involved in writing the business plan.

Business Plan Organization

Writing the business plan requires discipline and organization. Your plan should flow from the beginning to the end with continuity from one section to another.

Start with a title page which includes the name and address of your company. If your company doesn’t exist yet, use your contact address. Also include a telephone number and possibly an email address for quick contact.

Use the executive summary format for the first page. An executive summary provides a broad overview but includes sufficient data and statistical information so the reader knows the rest of the document supports the summary and its conclusions.

A table of contents makes the plan user friendly. It directs readers to the various broken down sections of the document in a quick easy method.

Follow up with the administrative details of the business. Who serves in what role and what are their responsibilities, educational background, expertise, etc. Include details as to how the company operates day to day, who makes the decisions and how these decisions are made. What are the policies and procedures for hiring and firing employees, their benefits, pay scale, and promotional opportunities and how will they be trained?

A marketing plan is a vital part of your business plan. Detail how you plan to increase sales and reach new markets. Demonstrate that your marketing plan is viable and will produce increased sales.

The financial end of the business comes next. Include data tables, charts and graphics depicting cash flow and sales projections. Back up these pictorial efforts with solid data references.

The final section of a winning business plan provides support documentation such as contracts, leases, resumes of principles, bank statements and other financial documents, letters of reference, demographics, articles and trend projections.

It’s time to write a business plan. Why? Equate a good business plan with a good house plan. Building a house without a plan means catastrophe and probably a hodgepodge of rooms. With little or no planning, costs skyrocket because no one plans economically placing the utilities or even laying the appropriate foundation for the expected dream house.

Strong Foundations

A business plan represents the foundation of your business. If the foundation fails, the business can’t survive. The foundation must be strong and able to withstand bad times along with good. A business plan forces consideration of where the business starts as a going concern and how it grows over time. It incorporates your eventual hopes for your business with realistic plans for today’s budget. It makes good use of money, carefully ensuring that the money available stretches as far as possible. Your business plan lays out the exact business you start, the products and service offered, the costs and expenses associated with those products and services and a realistic look at potential profit. Remember, define your markets – those currently buying, potential buyers and how you plan to attract both.

If you finance your business start-up, those helping you with financing expect a detailed business plan incorporating a section showing judicial use of their capital. The plan shows investors that you seriously researched your market and your projected profit depends on realistic sales and costs.

Next, we discuss actually writing the business plan.

Understanding the common mistakes made by small business entrepreneurs helps other entrepreneurs avoid these mistakes.

Resistance to Change

Change all by itself may be good or bad, but frequently we resist change without knowing the possible outcomes. Businesses often make the mistake of doing the same things the same way without understanding why or evaluating whether change might be beneficial. When an idea or method doesn’t work, find one that does. Change could improve something that does work. Constantly evaluate if change may provide savings in either time or money.

Promote Your Business

Marketing your business allows discovery of new markets and growth opportunities. Often we get so stuck in paying regular monthly bills that we forget the importance of allocating a marketing budget. Without marketing, your market share and financial position stay static. Growth demands marketing. Short of marketing dollars? Find cost effective ways for continual promotion of your business, making sure you identify possible new markets.

Know Your Customers

Your customers’ preferences change with new inventions in the market place. Their live styles and ages change. Be proactive in understanding your customers’ changing needs and buying patterns. Take time to listen to their needs and be constantly searching new solutions.

Provide New Products and Services

Listening to your customers offers you new ideas for products and services. Not all new products and services catch on quickly. Give customers time for adopting new items, but don’t stick to them so long that they bring your business down.

Employee Care and Feeding

Employees need encouragement and mentoring. Their vision differs from that of the owner. Remember that employees need ways to grow and feel appreciated. Keep morale high and watch productivity grow. Without good, committed employees, a business deteriorates quickly.

Sales Plan

Construct a realistic sales plan determining your market and their buying patterns; then measure sales constantly. Define methods for growth and ensure your business implements growth actions. Without a plan for sales, you have no gauge for the financial outcome. Without growth, your business remains static as costs increase.

Delegate, Delegate, Delegate

Find trustworthy employees and then delegate responsibility. It’s hard to let go, but you must over time. As your business grows, you need more and more support and more ways to delegate. Employees need increasing responsibility for their own self worth and to feel valued. Start with good training and as the employee grows, delegate more and more responsibility. Become the overseer, verifying those fulfilling their new roles and those employees not ready yet.

Springboard Ideas

Develop friends, other business entrepreneurs or family members as a trusted source for sounding out ideas. One mind alone may stay on the same track while throwing ideas around may develop new methods, products and services.

Forget Fear of Failure

Failure teaches us. Those who fear failure may not experience failure, but they may also miss out on great success if their fear drives them to be overly cautious. Those who fail and pick themselves back up, often learn from their failure and move forward to success.