Peter E. Jaret

Article / Updated 07-10-2023

If you plan on starting a virtual enterprise, you will need to account for a fast-changing climate in your business plan. Many observers are convinced that virtual companies will become increasingly common as advances in technology make it even easier for employees to work wherever they are. Transformative innovations will continue to yield new opportunities and new virtual business models. To take just one example, virtual reality is already making inroads in the information and entertainment sector. Chances are good that virtual reality will soon be used for hiring and training remote employees and as a tool for allowing potential customers to try out a product or service before buying it. No one — not even so-called futurists — can accurately predict where technological change will lead. But if you’re already on the cutting edge as a virtual business, it’s smart to stay as informed as you can about new breakthroughs and changing trends. Some advice: Keep an eye on business and technology news. Attend technology conferences relevant to your business, such as QCon, AppSphere, CIO, ITEXPO. Listen to your virtual team members (as remote workers, they’re often the first to hear about some cool new file-sharing or teleconferencing platform). Schedule regular sessions with key managers to review your IT operations and suggest areas for improvement.

Article / Updated 07-10-2023

Planning for your virtual business means accounting for the technological necessities. At the heart of every successful virtual company is a flexible IT network that allows employees, clients, customers, and subcontractors to interact smoothly and efficiently. Teleconferencing, videoconferencing, and groupchats allow participants from around the country or around the world to connect from far-flung locations. File-sharing programs allow group members to review and edit documents, passing them back and forth through digital transmissions instead of handing them off in person. Collaboration and project management apps provide a centralized place online where all project information is stored and accessible. Supporting your virtual team with IT solutions Technology is the key to virtual business success. If you’re a small virtual company, you may be able to assemble the IT components for group communication and collaboration by yourself. Or, you can turn to a long list of readily available and often free collaboration tools and software solutions that you can stay on top of by opening your browser and searching for “virtual team collaboration tools.” Among the many options, you can find the following tools: Collaboration tools that direct group communications through a central hub, such as Slack, which is free, and Huddle Project management tools for planning, scheduling, assigning, tracking, and managing tasks through a central hub, for example, Microsoft Project, Basecamp, JIRA, and Asana Document creation, file storage, and sharing tools, such as Dropbox, Google Drive, and Box Virtual meeting tools, for example, webEx Meetings and GoToMeeting Videocall and conferencing tools, such as Skype and Google Hangouts Realtime talk and chat tools, for example, Skype, Facebook Messenger, Google Hangouts, and HipChat, to name a few Plus, you can turn to experts for customized solutions, including companies that help artists or craftspeople build and manage retail websites, software programs designed to enable lawyers or other professionals to work virtually, and tech wizards who help you put together your own IT network. The bigger your enterprise is, the bigger your IT component is likely to be. The specific technology tools you’ll need will depend on the kind of virtual business you plan to run. Whether you’re planning a one-person business or a sprawling international company with distributed workers around the world, your business plan should specifically address the kinds of technologies you’ll use to conduct your business virtually. Using technology as a team-building resource One of the most difficult challenges for a virtual company is creating a strong sense of teamwork among employees who never lay eyes on one another. The chief complaint we’ve heard from people who didn’t like working virtually is that they felt isolated and, well, remote. Successful virtual companies find clever ways to use technology to motivate and inspire employees. One firm set up a group chat room, dubbed “The Water Cooler,” which allows remote employees to interact informally, sharing personal stories and funny videos. Another company asked employees to create online bios that combined both professional information and personal stuff like favorite hobbies and most embarrassing moments. Another encouraged remote employees to interact by creating a virtual book club and an intranet travel site that allows employees to post photos and descriptions of their vacation outings and take advantage of group discounts. Other strategies to inspire and motivate remote employees and to foster teamwork include Posting your mission statement and values statement prominently on your website and on key internal communications with employees Creating an online newsletter or blog that includes vignettes of remote employees Offering awards and contests that allow remote workers to compete against one another, either individually or in teams Holding in-person or virtual annual retreats or summits where remote employees get together — in real-life if possible and in real-time if not.

Article / Updated 07-05-2023

You need to include your remote team as part of your business plan. At the heart of the virtual business model is a radical new relationship with employees. Instead of punching a clock or showing up at the office, employees work remotely, often when they want to, and their only contact with management may be via phone, email, videocall and groupchat apps, or other project management and digital technologies. The freedom and flexibility is a strong draw for many employees and can make it easy to tap top talent. But it also requires team members with the right temperament and talents. The best people for a virtual company organization are Self-motivated Well-organized Good communicators Flexible about their working schedules Sold on the benefits of working virtually Comfortable with evolving technologies Willing to buy into the culture, mission, and goals of the business Many virtual companies conduct the hiring process virtually, evaluating and interviewing applicants without ever having a face-to-face conversation. Traditional HR folks might see that as a disadvantage. But if prospective employees will be working remotely, it can actually be an advantage to interact with them during the hiring process in the same way you’ll work with them — by email, videocall, chat rooms, and whatever other technologies you employ. Because employees in a virtual company work more independently than traditional employees, having a solid and detailed job description for each position is critically important. With a comprehensive job description in place, the job candidate will be clear about expectations. Having a detailed job description also provides the basis for reviewing an employee’s performance.

Article / Updated 06-28-2023

You need a consistent set of policies in your virtual business’s plan. The virtue of a virtual company is that employees have tremendous freedom in their working lives. Managed well, a virtual company can be more flexible and efficient than a traditional nine-to-five, office-based enterprise. But with employees working as free agents distributed around the country — and sometimes around the world — virtual companies must establish specific standards and policies for operations and procedures, so that employees know how the business runs and what is expected of them. The specifics will depend on the kind of business you plan to run. In the area of human resources, policies range from how prospective employees are hired and trained to how and how often their performance will be reviewed. If your business involves contracts with clients or customers, you need policies in place to establish who is authorized to sign on behalf of the company. Plus, you’ll need policies for how products are produced, how and when outside supplies or services are purchased, how timelines are created and tracked, and more. The online company Etsy provides a marketplace for artists and craftspeople to sell their wares. Sellers are essentially distributed employees who create the products sold on the company’s website. Etsy’s claim to fame is that it is a marketplace for handmade or individually designed products. Recently the company came under criticism because some people were hiring others to make the products and in some cases even selling (and sometimes reselling) manufactured goods. In response, Etsy established specific standards — “Our House Rules,” the company calls them — for what constitutes “handmade” goods and manufactured products. Your business plan won’t include every standard and policy relating to how you do business. But definitely give some thought to the most important standards and policies you’ll need in place to run your operation. Those that are essential to defining your business and how it will operate should be described in your plan.

Article / Updated 04-14-2023

Leave room in your business plan for branding your virtual enterprise. Your brand is the set of beliefs that people associate with your business name. It mirrors the overall image and tone of your company, your employees, your product, and your customer service. Branding is reflected through everything from your name and logo to your business offerings to how product manuals are written and how employees interact with customers. Branding requires consistency in message, tone, interactions, and the promise you make and keep with customers. And branding can be a challenge in a virtual enterprise, with far-flung employees operating independently. To insure consistency across all areas of your operation: Draft a clear and concise brand statement and communicate it to everyone. Design a logo and establish exactly where and how it should appear. Create stationery, business cards, and a format for the block of text used in email signatures and make sure all virtual team members know to use them in any official business communications to project a consistent company look. Establish style guidelines for all formal written communications. (Search online for “brand style guidelines” for plenty of examples.) Consider hiring an editor who oversees all official company documents, from instruction manuals or product FAQs to marketing materials. A poorly written document reflects badly on the quality of the products or services you offer. Develop a set of customer service guidelines to establish the quality of customer interactions you expect your employees to provide. Ask your customers and clients for feedback. Follow a sale with a customer survey or telephone call, for instance, in order to get a sense of how your remote team is performing. Because branding is so important to a company’s image — and because it’s a challenge for many virtual companies — your plan should specifically describe how you intend to develop the communication consistency that’s essential to strong brand management.

Cheat Sheet / Updated 04-28-2022

The best way — make that the only way — to achieve business success is to have a solid business plan. A business plan is critical to finding a successful course through turbulent times. If you have a really great idea for making money (or doing good with a nonprofit), an effective business plan will help you make the most of it. The following can guide you through some important aspects of putting together and assessing your business plan.

Article / Updated 09-01-2021

You've finally made it! After many months or, perhaps, years of planning and saving, you're now the sole proprietor of your very own business — woohoo! But now the real work begins, and one big question lies ahead: How much should you be charging? Start with addressing how you should charge, then move on to determining an appropriate rate. Charging by the hour vs. the project Most self-employed service providers charge in one of the following ways: By the hour: You establish an hourly rate, keep track of your time, and bill clients for hours spent on their behalf. This is the standard pricing approach for service businesses handling small-project jobs. By the project: You and your client agree in advance on a fixed price for a defined amount of work. This is the standard pricing approach for service businesses handling large-project jobs. A combined approach: A building contractor, for example, may bid on a set of plans and establish a fee for the project. But he may also stipulate that additional client-requested work over and above that covered by the estimate is to be paid at an established hourly rate. Other businesses follow other billing approaches. For example, authors often receive a royalty, or a percentage of the cover price, for each book sold. Freelance writers may charge by the page or word. A photographer might sell rights to photos based on the way the purchaser will use them. And some professionals are paid retainers, or upfront payments, in return for their availability to work on an as-needed basis. Whatever payment arrangement you settle on, you still have to figure out exactly how much to charge. Establishing an hourly rate If you provide a service of some sort, begin by establishing an hourly rate. Even if you end up charging by the project or product, when you know your hourly rate, you can estimate the number of hours a job will take and multiply that number by your hourly rate to arrive at your project or product cost. One way to establish an hourly rate is to find out what other people doing similar work charge. In some cases, you can discover this information simply by talking to other independent contractors or by looking at their websites or marketing materials. You can also check with professional organizations to get an idea of what people charge in different parts of the country. Rates do vary. For example, freelance editors may be able to charge $35 an hour in St. Louis or Cedar Rapids and $50 or more in pricey places like New York or California. To be competitive, set your rates within a similar price range. If you’re just starting out, you may want to begin at the lower end of the scale. If you have a long list of credentials and have earned rave reviews from clients, you can shoot for the upper end. Another way to arrive at your pricing is to consider the following: How much customers will be willing to pay for your product or service How many hours a year you think you can spend on billable activities How many hours a year you need to devote to running your business How much it costs you to run your business Whether your projected revenue minus expenses equals an adequate profit Say that you’re a consultant who wants to personally make $80,000 a year. Further, assume that your overhead costs total $22,000 a year, plus you want to earn at least $8,000 profit annually to fund future growth. That means your consulting business needs to bring in at least $110,000 each year. Next, say that out of each 40-hour workweek, you’ll spend 12 hours running your business (doing the banking, networking, making new business calls, working with accountants, and on and on). That leaves 28 hours a week, 50 weeks a year (assuming that you give yourself two weeks off for a well-earned annual getaway) for billable activities — or a total of 1,400 billable hours a year. With all of that information in hand, you can divide $110,000 by 1,400 hours to arrive at an hourly billing rate of $78.50. If that’s more than you think clients will be willing to pay, you have a few choices: You can reduce your overhead costs, you can reduce your earnings and profit expectations, or you can spend more hours on billable activities, which probably means working longer weeks. Determine your tasks, time, and expenses To get a good idea of how you spend your working days, use this form. This information will be useful as you work to set your hourly rate. Even if you’re self-employed, plan to make and set aside a profit above and beyond what you pay yourself. Doing so allows you to expand and develop your business when times are good. It also provides an important safety net, should your business experience an unforeseen setback. Take time to figure the hourly rate you need to charge to cover your salary, overhead, and profit projections. You may want to use this form to make sure that your rate covers all your business expenses. Check all categories that apply to your business and enter the rough amounts you expect to spend. In your business plan, include information on how and what you intend to charge for your service or product. Show the calculations behind your pricing decisions.

Article / Updated 08-26-2016

If you plan to operate a virtual business, you need to compensate for working without headquarters. A headquarters or home office is more than a bunch of rooms and corridors. The space also reflects the hierarchy of a business and how it operates. For example, in the Washington, D.C., headquarters of a well-known magazine, one floor is devoted to editorial, another to photography, and another to art. One entire floor is devoted to captions that accompany the photographs. The top brass reside — you guessed it — on the top floor. The headquarters, in other words, reflects and reinforces the magazine’s operational structure and priorities. A virtual business must find other ways to establish and convey its management structure and its way of doing business. Several of the foundations of solid business planning — creating a strong mission and vision statement, setting a clear strategic direction, and describing management and operations are especially important for virtual companies. In our experience, successful virtual companies have the following in common: The right leadership: Top managers are committed and even passionate about the benefits of a virtual structure. A strong team spirit and shared sense of business culture: Everything the company does is aligned around common business vision, mission, values, goals, strategies, and brand. The right team members: In the absence of face-to-face interaction, virtual companies succeed by developing detailed job descriptions and having systems and standards in place that cover everything from working hours and work quality to performance reviews. They hire people who work well with little supervision and who also have a clear sense of how they fit into the organization. Good communications systems: Because people aren’t running into one another in the hallway or at the water cooler, successful virtual companies institute formal ways for people to stay in touch. They make smart use of a variety of online communication and document-sharing tools. If operating as a virtual business is key to your competitive strategy, your plan should emphasize the benefits and challenges of operating virtually. Explain why a virtual organization is well suited to your goals and strategy, but also be up-front about the challenges of operating virtually, and detail how you plan to address them. If your business will combine some virtual operations with some traditional facility-based operations, describe how each will operate and interact.

Article / Updated 08-26-2016

If you plan to make your virtual business a reality, you will need to evaluate your idea before you launch into your business plan. Take time up-front to think through whether your business idea can succeed using a virtual organization. Ponder these essential questions: Is the product or service you provide a good fit for a virtual business? Can you effectively reach customers without a brick-and-mortar home base? Which aspects of your operations are best suited to being conducted virtually? Which aspects of your business would benefit from having an office or storefront? What are the biggest challenges you’ll face going virtual? What strategies will you use to address those challenges? If you find yourself struggling to make a strong argument for going virtual, you may want to rethink your plan. To face up to the challenges that a virtual business organization can pose, check out Form 12-2. Tick off each of the items that are relevant to your business plan. Then take time to detail strategies that you plan to use to address these challenges. Very few businesses are entirely virtual. But more and more conduct key parts of their operations virtually.

Article / Updated 08-26-2016

Even a virtual business needs a solid business plan. The most obvious benefit of a virtual business is tallied up in dollars and cents — the money saved by not having to maintain a snazzy suite of offices, a high-rent storefront, or other facilities. When a well-known business magazine headquartered in New York contemplated going virtual, it projected savings from rent alone at about half a million dollars a year — enough to give every employee a $16,000 bonus. Even if you’re not paying Manhattan commercial real estate prices, you can still save a bundle by creating a virtual office rather than renting a physical one. Here are some other benefits: Flexibility: If your business uses independent contractors who are hired on a project basis or for limited periods of time, you can respond more flexibly to the ups and downs of the market, taking people on only when you need them. An edge in hiring: Ask most people if they’d prefer to work at home and on their own schedule, and the answer is a resounding “yes!” Not everyone is cut out for working independently, of course, but for those who are, a virtual business can be attractive — making hiring top talent that much easier. Productivity: A recent Stanford University study found that employees who telecommute or work remotely are 13.5 percent more productive. Maybe that’s because they spend less time in meetings or hanging out around the water cooler. Employee retention: The same Stanford University study found that employees who work remotely are half as likely to quit as office-based workers. That discovery speaks to the job satisfaction many people feel when they’re judged by the work they do rather than the hours they put in. Creativity: Creative solutions are the driving force behind many innovative businesses. Where creativity requires uninterrupted stretches of time and when the creative spark flashes at odd hours, a virtual business organization may be ideal. If you’re considering a virtual business operation, use Form 12-1 to check off the benefits that you hope to get. Highlighting the benefits you hope to enjoy by going virtual is important because it allows you to focus your planning to give you the best shot at attaining them. Go to www.dummies.com/go/businessplanskit to find and download the forms. Many virtual businesses we are sold on the benefits of operating chiefly or entirely online. They love the cost savings, the flexibility, and the competitive agility they gain by operating as a virtual team. Businesses that depend on creative output are convinced that a virtual operation gives their employees the freedom to be more creative. Firms that employ young programmers say a virtual organization helps them keep and attract the best talent. Businesses looking for geographic reach say there’s no better way to go after far-flung markets. Check out the websites of many pioneering virtual companies and you can practically feel the excitement. Automattic, which describes itself as “the people behind WordPress” is “a distributed company, democratizing publishing and development.” All its employees, the website proudly proclaims, “work from their own home or office, and we’re spread all over the world.” Mozilla, the nonprofit behind the web browser Firefox, has employees working in more than 30 countries. It describes itself to prospective employees as “a global pack of do-gooders, rabble-rousers, and passionate defenders of the web.” Upworthy, a fast-growing virtual media company, trumpets the fact that employees can work and live anywhere. “Work from home, from a coffee shop, from a coworking space,” the company’s website says. “Go move to Montana for a month and work from there if you want. (And if you already live in Montana, go on living there!)” Fire Engine RED, a data solutions company that serves the education marketplace, boasts about the talent it has attracted as a 100% virtual company. “We’re able to attract and hire top talent, no matter where they live.” Genuitec, a software company with a small home base in Texas, employs programmers around the world. With teams telecommuting in the United States, India, Mexico, Africa, and Europe, “we thrive in a full-time telecommuting environment,” the firm’s website proclaims. Sound great? You bet. But creating and managing a virtual business isn’t all polka dots and moonbeams. Many companies had bumpy rides as they planned and launched their virtual businesses. Hiring people suited to working on their own can be tricky. Communicating with a remote workforce isn’t easy, especially if you have employees scattered across many time zones. Creating a sense of teamwork and a shared commitment also can be a challenge in a company where people spend very little time face-to-face with one another. A virtual company can’t easily take advantage of the synergy that comes from in-person meetings and the back-and-forth banter that goes with them. The fact is, as cool as the idea of a virtual company sounds, not all business ideas are suited to operating without an office or home base. Consider the example of several start-ups that are testing whether people will be willing to seek medical advice from remote teams of physicians. One new app provides dermatology advice (and prescriptions, if appropriate), on your smartphone. Instead of going into a brick-and-mortar clinic, you send a list of your symptoms and a photo of your skin problem. A remote dermatologist makes a diagnosis and provides a treatment plan without ever laying eyes on you. The jury is still out on whether this kind of virtual clinic will work. But almost everyone agrees that a virtual clinic is appropriate only for certain forms of medicine. Diagnosing and treating skin diseases may lend itself particularly well to a virtual format. Fixing broken bones, not so much.