TIME Careers & Workplace

These 3 Tools Will Help You Prepare a Killer Business Plan

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A thorough plan will increase your chance of success

Mission planning in the SEAL Teams always took one of two routes: deliberate or hasty. Deliberate planning assumed a longer term approach (greater than 48 hours) whereas hasty planning was for anything within a 24-hour period — with some missions as soon as now.

While both planning methodologies entailed the same three criteria — time, resources and requirements — two significant differences determined which approach to use: the immediacy of the demand (essentially, the threat) imposed by the enemy (or competitor), and the accuracy of information we had to plan.

For the entrepreneur, it’s tempting to vie for the hasty approach, be like Nike and “just do it,” with hopes that your product will just take off into newfound success. Chances are, however, that it won’t. At least, not without doing the due diligence that gathers enough information to formulate an impenetrable business plan.

To the extent that you can do a thorough, deliberate analysis of the industry, do it. There are tons of free tools that can guide you through the process. In the meantime, here are three simple business analysis tools to help you identify what distinguishes your brand from the rest:


Not to be confused with animals or people, PEST is a way to analyze the big picture changes within your industry to identify growth opportunities. Specifically, the acronym stands for:

  • Political factors
  • Economic factors
  • Social factors
  • Technological factors

Another variation of PEST is PESTLE, which includes the legal and environmental considerations. If you’re stuck on where to begin, start by segmenting each factor into the five W’s — who, what, when, where, why — then unleash the (mental) fury from there.

2. SWOT, the enhanced version

While PEST offers a macro-level view of the competitive landscape, SWOT is typically used at a more micro level to analyze a specific business, product or service. Here’s the value of SWOT:

  • Strengths. While the number of beers you can slam or the number of pushups you can crank out in 60 seconds are certainly enviable qualities (at least, they were when I was in college), competitive strengths are the advantageous skills, resources, capital, network or value that distinguishes your brand from all others. They are why consumers want you and you alone.
  • Weaknesses. A pretty straightforward term. However, if you’re unsure of what your weaknesses are, take your strengths, flip them upside down, and boom, there they are. Weaknesses are where your strengths fall short in comparison to your competitors’. These may be internal disadvantages within your company such as additional bureaucracy or processes, or external weaknesses that fall prey to the market, economy or technology.
  • Opportunities. This is where you leverage your strengths to exploit openings such as lower interest rates, competitor prices, seasonal changes or consumer trends.
  • Threats. These are bad. They are the little guys who work for Murphy and impose his not-so-likable law. Of course, the opposite is true, too. Threats have a way of revealing your current state, they unearth the ill prepared and reveal them for what they are: developmental opportunities. We had a saying in the SEAL Teams: You don’t rise to the occasion, you fall to the level of your training.

Here’s the secret to maximizing the value of a SWOT analysis: Pit your strengths against your opportunities and use the result as leverage points to build greater value. Place your weaknesses against your threats and use the byproduct as defense points. This way, weaknesses don’t diminish and strengths become stronger based on emerging opportunities.

3. 7S model

Unlike the aforementioned tools that are generally used for external analysis, the 7S model looks inward at your own company. Developed by McKinsey & Company, the seven S’s of strategy, structure, systems, style, shared values, staff and skills demonstrate why organizations don’t operate as a group of independent silos but rather as a network of interconnected parts.

Imagine an octagon and place an S at every vertex, except for “shared values.” Shared values belongs in the center of the octagon because, well, they’re shared. Now, draw a line from each vertex to another such that each S is connected to another and you see how each component is inextricably linked to another.

Writing a business plan doesn’t have to be agonizing — there can be some fun in doing it. More so, the simple act of writing out your business plan through the aforementioned perspectives will reveal previously unconsidered insights that will set you up for success.

This article originally appeared on Entrepreneur.com

More from Entrepreneur.com:

MONEY Startups

3 Ways to Figure Out If There’s a Market for Your Business Idea

designer working on drawing
Dina Belenko Photography—Getty Images

Before you waste a whole mess of money.

When entrepreneur Everett Dickson made plans to take lessons in racing open-wheel cars at a school in Arizona, he ran into an awkward problem. As a user of smokeless tobacco—aka chewing tobacco—he needed a portable spittoon that he could take with him into the car. He could only find one model when he searched the internet, and it didn’t appeal to him. “It literally would open in your pocket,” he says.

That led to the idea for his Atlanta-based company FLASR, which makes its own portable four-ounce spittoon. Launching the business in 2012, Dickson—an engineer by training—sketched the original concept drawings himself, then hires pros to convert them into 3D designs and enlisted a prototype company to build working models. Then he negotiated the opportunity to test his wares in 400 retail outlets, such as convenience stores. His beta test lasted from December 2013 to May 2014. FLASR sold 25,000 units in 4 months—a sign to him that it was worthwhile to proceed.


After making some tweaks, such as enlarging the opening diameter and changing his point of sale displays, he did a gradual rollout in 2015. FLASR, which makes several models with different looks, is off to a strong start. In the first quarter of 2015, the startup generated $20,000 in sales. Dickson is the only employee at his company, which relies on contracted help in areas such as sales.

As Dickson, a veteran entrepreneur, has found, determining if there is a market for your idea is essential before you roll it out. Otherwise, it’s easy to waste a lot of time and money on a product or service that no one wants.

Here’s how to figure out if the world wants to buy what you have to sell.

Do your market research. Before working on a prototype for his product, Dickson pored over market research reports on the smokeless tobacco industry from Euromonitor International, to make sure there were enough potential buyers. He found that the size of the U.S. marketplace was expected to grow from $4.8 billion in 2010 to $9 billion in 2015. “We assume much of it is being driven by widespread implementation of smoking restrictions in public and private buildings,” Dickson says. He also saw that big corporations in the tobacco industry such as RJR were acquiring makers of smokeless tobacco. “The industry seems to be recognizing this,” he says. The homework he did gave him confidence that there was potential to create a scalable business in the market.

The same type of research is important if you sell a service. At LiveStreamingFitness.com in Tulsa, Oklahoma, CEO and serial entrepreneur Keith Kochner concluded there was an untapped need in the marketplace for his service—which streams fitness videos around the clock—after reviewing market research showing that only a small percentage of the American population has a health club membership.

Once Kochner set up his website, he enlisted several hundred beta testers to see how they reacted to the service. In response to their feedback, he fixed glitches on the site and made tweaks such as adding music to their videos. “I found all kinds of things weren’t working,” he says. Then he did his official launch, which took place January 1. Charging $9.90 a month for a 30-day membership, he says he is on track to hit at least $3 million in revenues in the next 12 months.

Turn to your clients. If you have even a tiny handful of customers, they may be your best source of candid feedback on whether your product or service idea is appealing. RevTrax in New York City offers technology that makes it possible for retail clients to measure how their digital promotions are affecting in-store sales. After winning early clients such as Jackson Hewitt and Walgreens, chief operating officer Seth Sarelson and his co-founders paid close attention to cues from such customers to assess the market for their technology. “Sometimes clients can help you see the largest business opportunities,” he says. In response to feedback from one client, RevTrax expanded from providing data only on the results of affiliate marketing to many forms of digital marketing, such as email marketing. The company, founded in 2008, now has grown to more than 60 employees.

Anisa Telwar Kaicker is CEO and founder of Anisa International, a maker of private label cosmetic brushes and applicators in Atlanta that serves clients such as Estee Lauder and Laura Mercier. She will often ask such customers what they think of a new brush before rolling it out. “Even if I went into a client and said this is not fully vetted yet, but I’d like your insight, they were always honored to have a first look,” she says. “They would be the ones buying the product.” To protect her ideas, she routinely files for provisional patents and will mention in conversations, “This is patent pending.” Her firm, founded more than 20 years ago, now generates $40 million in annual revenue, she says.

Ask an expert. At Guardian Pharmacy in Atlanta, which serves institutional clients such as long-term care facilities, CEO Fred Burke and his cofounders turned to Burke’s mentor when trying to figure out where there would be a market for the high-service model they wanted to offer.

His mentor, Bill Bindley, had previously launched Bindley Western, a major drug distributor acquired by Cardinal Health. “You need to look at long-term care facilities,” he told Burke. Burke paid attention and moved into that niche, quickly finding customers. Today, Guardian Pharmacy has grown to a chain with $325 million in annual revenue, and Bindley is an investor and board member. “He is an industry veteran,” says Burke. “I listen very carefully to what he has to say.”

MONEY Startups

How One Woman Overcame a Panic Disorder to Build a $2 Million Solo Business

blurry traffic

And she works from home.

Driving to work one day, multimedia producer Pamela Grossman felt like she couldn’t breathe. “My heart was racing,” she recalls. “I thought I was dying. I had to pull over.”

That day changed her life. It turned out she had a panic disorder, and it kicked in with a vengeance. She embarked on years of treatment, from medication to therapy, but the condition didn’t go away.

“It was devastating,” says Grossman. “I’m a go-get-‘em performer.”

That was about 17 years ago. About six months after the attack, in January 2000, the multimedia producer left her job at an ad agency and started a boutique marketing and production studio called In the Present.

Because the attacks made it impossible for her to drive, she set up her business at home, in the Atlanta metropolitan area, and relied on rides from others to get around. “I had no choice,” she says. “It was either that or go on disability. While these panic attacks were really, really bad, I had to work. I love what I do. I can’t not work.”

Today, Grossman is one of a growing number of solo entrepreneurs who are building their businesses to more than $1 million in revenue. According to new data from the U.S. Census Bureau, 30,174 “nonemployer” firms brought in $1 million to $2,499,999 in 2013, up from 23,176 in 2009—a 30% increase. “I’m hoping to tip over $2 million [in revenue],” she says. “We’re really close to that.”

How did she pull it off, even while battling a disorder that dramatically altered her life? Here are some of her strategies.

Be honest: When Grossman’s disorder first struck, she arranged to have a flexible schedule at work. “I had to be able to leave when I wanted to,” she says. Eventually, when she realized it made sense to start her own business, she was candid with her clients about her health. “I was very lucky all of my work connections knew who I was before the panic attacks,” she says. “They knew something was seriously wrong.”

Still, they saw that the quality of her work was as high as it always had been. “A lot of the clients I had worked with wanted to continue working with me,” she says. Today, she is serving many of those same clients—and their referrals.

“I have not lost one client in 17 years,” she says. “Eighty percent of them, I’ve had almost since the beginning, if not the beginning. The rest came mostly from referrals.”

Build a flexible team. Grossman’s business handles projects such as logo design, brand building, marketing and promotional programs, social media marketing and video production. With work quickly flowing in from the beginning, she realized she could not do all of it herself. But she didn’t need full-time, ongoing help, so she opted for a contract model, where she compensates highly-skilled contacts with excellent rates. “I’ve got a great team of people that rotate in and work,” she says.

With clients around the globe, she is able to make time zones work in her favor by hiring contractors who get things done while she is sleeping. “We work around the clock,” she says.

Make technology work for you. Grossman uses GoToMeeting to hold conferences with distant clients “They can see our screens and work on designs together,” she says. The GoToMyPC app lets her access her computer from wherever she happens to be.

Skype is also part of her routine. “For someone like me who can’t always go out to the client, Skype has been my best friend,” she says. “If a client wants to see my face, they can see it through Skype.”

Stay alert to unexpected opportunities. Grossman has recently seen some improvements in her panic disorder thanks to working with a service animal—a 70-pound Labradoodle named Milo. “We’re just getting in the rhythm of him helping me move about, drive again, and do the things I need to do,” she says.

Her condition has made her aware of the struggles of other people with disabilities who use service animals, which are allowed to enter public buildings and transportation under the Americans with Disabilities Act.

“One of the things I quickly realized was how many businesses don’t understand the law and how you are turned down going into a post office or gym,” Grossman says.

In a division of her company called ITPVIDEO, she recently produced a video and test to train businesses and governments how to comply with the law. She sells them for less than $5 per person, with 20% of the profits going to nonprofits that train service dogs.

“That was a great project,” says Grossman. “It is really helping people with disabilities lead a better life.”

MONEY Startups

5 Smart Ways to Build Your Business Into a Distinctive Brand

Pair of red Converse sneakers in row of white Keds sneakers
Leonard Mc Lane—Getty Images

How to build a business that stands out from the competition.

When QuadJobs—a website that connects local employers with college and grad students looking for work—launched in October 2014, the founders wanted to perfect their branding right out of the starting gate.

The three co-founders were all veterans of the business world and knew that if their branding did not immediately convey their value proposition to potential users, they might not get a second chance.

“We realized early on that for people to understand the brand, you have to be hyperfocused about that,” says co-founder Betsey O’Reilly, a former managing director at Deutsche Bank, who teamed up with Andra Newman, formerly head of recruitment for J. Crew and Abercrombie & Fitch, and Bridie Loverro, founder of Blue State Coffee.

So how’d they do it? To start, the team spent a lot of time researching their market and incorporating what they learned into their brand. When they found that potential employers want their work force to be college-educated, for example, they fine-tuned their marketing to highlight that. Their official tag line: “The educated way to get things done.”

This and similar branding refinements seem to be working. In the first six months QuadJobs has attracted about 1,000 subscribers who hire help through the site and worked with 8,000 students, according to O’Reilly. Investors are also responding to the brand. QuadJobs raised $500,000 in initial funding and recently borrowed $300,000 in convertible debt.

Want to get your own branding right from the start? Here are some strategies to help you strike the right note.

1) Don’t expect to do it in one day. Building a brand is a multipart process that starts with getting clear on your mission and target audience and creating images and words that reflect that, says Donna Maria Coles Johnson, founder and CEO of the Indie Business Network, a 1,200 member trade organization for makers of handmade and artisanal products (think soaps to baked goods). “It’s not just how it looks,” she says. “It’s what you bring to the table as you become the walking, talking representative of that brand.” Build enough time into the launch of your business to reflect that.

2) Talk with potential customers. Getting as clear as possible about what you’ll offer and how you’ll explain that in your branding will ensure that you build a strong brand from the outset. One of the best ways to do this is by talking with people in your target market to find out their needs, so you can fine-tune your offering and your brand to reflect that.

QuadJobs arranged about 10 focus group sessions with about 200 participants—including both clients and employees—to make sure the company’s value proposition was clear. “We really tried to pinpoint what the pain point was for both sides of the equation,” says O’Reilly. That enabled its team to focus the site, and its branding, on what mattered to both groups.

During the focus groups, employers often made comments like, “I am so much more comfortable bringing a college student into my house than a lot of the other options that are out there,” O’Reilly said. Getting this feedback showed QuadJobs’ founders that the education level of their talent was their core differentiator. That in turn, shaped elements of its branding such as their tag line.

Meanwhile, from the students in the focus groups, the company learned that finding gigs that they could fit into a demanding schedule of classes was very important. QuadJobs highlights the flexibility of its gigs on the site’s home page. Many of the young people also hoped to build a work history that would help them get future jobs. That led to the development of the JobGPA, a compilation of employers’ reviews and comments about a student’s performance that they can show to future employers. “We think there is real value in these jobs,” says O’Reilly. “They show work ethic, commitment, and skills.”

3) Keep it simple. If you do a marketing campaign, whether on radio or the web, it’s tempting to try to cram a ton of information into your message. That will only confuse your audience, says O’Reilly. It is better, she says, to stay clear and focus on your core offering. “You have to assume people are hearing your message for the first time—every time,” she says.

4) Connect on an emotional level. Sometimes conveying the vibe of your brand and your company is more important than trotting out a list of features you offer. “Start with an emotional connection,” recommends Jason Pomeranc, co-founder of SIXTY Hotels. His boutique-hotel chain has opened two properties in New York City—SIXTY SoHo and SIXTY LES (short for Lower East Side)—and one in California, SIXTY Beverly Hills, since the firm launched in November 2013. Another outpost is slated to open in South Beach, Fla., in October.

One way SIXTYHotels conveys its ambiance is through an online publication called alphasixty, which covers topics like art, fashion, and food. “We don’t talk about the hotel that much,” Pomeranc says. “We talk about what we love.” In a previous hotel business he sold, he found customers really connected with a print magazine that the company published. It gave them a sense of what a hotel stay would feel like, he says.

5) Stay flexible. Don’t expect the brand you launch to remain static. You may need to make some nips and tucks over time. “When your target audience responds to you, that’s when the brand begins to be created,” says Coles Johnson.

Many companies discover that their brand resonates—but with a different group of customers, or in a different way, than they originally expected. One personal-care products company run by a husband-and-wife team in the Indie Business Network focused on female customers in the beginning. When the husband got involved in talking with their clientele, the business began to attract more men, Coles Johnson says. The couple changed the brand from Simply 7 Skincare to SoapCommander.com, she says. “Whether you start off knowing who your customers are, your customers will come and tell you if you’re right or you’re wrong,” says Coles Johnson.

The trick is responding to unexpected opportunities. “In order to create a successful brand, you have to follow where your customers are telling you that you need to go,” says Coles Johnson.

Read next: 5 Creative Ways To Fund Your Small Business

MONEY Startups

Google’s Sidewalk Labs Could Ease Cities’ Growing Pains

As more and more people move into cities, Google wants to make urban areas more efficient places to live.

Google’s new startup Sidewalk Labs is trying to help cities ease growing pains as more and more people leave the suburbs and rural areas to move to major metro areas like Austin, Texas; Raleigh, N.C.; and Phoenix, Ariz. Former NYC deputy mayor Dan Doctoroff is leading the startup. Google already runs apps designed to simplify urban living, like Google Maps and Waze. The U.N. estimates 60% of the world’s population will live in urban areas by 2030.

MONEY Startups

How to Create a Website That Really Sells Your Business

John W. Tomac

Most customers don't trust a business that has no web presence.

A surprising 45% of U.S. and U.K. small businesses don’t have websites, a 2014 survey by Internet services company Hibu found. Without your own URL, you’ll miss a chance to drive sales. Plus 56% of consumers recently polled by Weebly said they don’t trust a business that has no web presence. Build a site that sells with these tips:

Greet customers. Your homepage must capture people instantly. Focus on visuals, like a carousel of product photos. Include a shot of the team; faces help people establish trust, says Patrick Schwerdtfeger, author of Marketing Shortcuts for the Self-Employed.

Earn their business. Don’t go straight for a hard sell. Instead, lead with value: Blog posts offering rich content that uses the right keywords (use Google AdWords to find them) build credibility and draw traffic, says Atlanta small business web designer Tom Nguyen.

Close the deal. “Businesses do all this work to perfect their sites but forget to ask for a purchase,” says Rebecca Murtagh, author of Million Dollar Websites. Use a clickable call to action (like “Buy now”) to convert shoppers to customers.

MONEY Startups

This One-Man Business Sells Millions Worth of Swag Out of a Garage

"Your Logo Here" written on canvas tote bag
Tony Garcia—Getty Images

One key lesson: Outsourcing.

Need a jumbo canvas shopping bag printed with your company’s logo? What about a twist-action ballpoint pen with your company’s name and web address on it?

Harry Ein is your man.

Since July 2010, Ein has run his one-person business, Perfection Promo, from the three-car garage at his house in Walnut Creek, Calif., providing swag to clients from corporations to sports teams. He started his business after departing a former employer in the same industry.

Since then, he says he has won business from clients including Microsoft, Safeway, Benefit Cosmetics and the NBA. This year, he projects revenue of $4 million at the profitable firm. In 2015, Advantages Magazine, a trade publication, named him the #1 sales rep of the year for promotional products.

Ein is one of the growing number of Americans who are creating businesses that are breaking $1 million in revenue with no employees other than the owners. U.S. Census Bureau counted 30,174 “nonemployer” firms that had revenues of $1 million to $2,499,999 in 2013, up from 23,176 in 2009—a 30% increase.

So how does Ein do it all as a one-man band? Well, he doesn’t, not exactly.

His not-so-secret strategy to keeping his firm ultra-lean is outsourcing. By reading industry publications and networking in his industry, he found out about a company called iPROMOTEu, in Wayland, Mass. It provides back-office services such as trafficking orders and collecting money from customers to independent firms like his. By affiliating with iPROMOTEu, he says he has been able to free his time to focus on sales. And it costs him less than maintaining his own staff. “If I didn’t have a billing company and all of that back end stuff, I’d have to have three to five employees,” he says.

Here’s how Ein built his profitable business to $4 million in annual revenue since starting it in July 2010.

Make the most of what you already know. When Ein was getting started, he picked a business in which he could use his natural gift for selling. In his late teens, Ein used the food money his parents left him while they were on vacation to buy a few Tickle Me Elmo dolls when the craze for them was in full swing and they were selling out. He brought the toys to a local mall and sold them to frantic shoppers who couldn’t find them in stores. “I was able to sell them for double and triple the cost,” he says.

After college, Ein worked as a sales executive at The Ad Solution, a provider of branded merchandise such as office gifts, getting crash course in his industry. He worked there nearly nine years before making the leap into his own firm. The knowledge and connections he built paid off. He says he hit $700,000 in sales his first year.

Live lean. Now that Ein is married and has a two-year-old son, he has the type of financial responsibilities that drive many people into the seeming security of a W-2 job. By working from home, he is able to reduce financial pressure on himself, keeping overhead at his business down and his commuting costs to zero. If he needs to meet with customers face to face, he goes to see them.

There’s an added bonus. Working from his home office gives him more time to play with his toddler. “We have a park that’s 20 yards from our house,” says Ein. “At 5 pm, I’ll try to take him over.”

Do the math. Ein decided on his current outsourcing model after talking with owners of other promotional products companies about how they were running their firms. One owner said that his company—which brought in $20 million in sales with 25 employees—had been better off when it was just one or two people, because of the costs and issues that arose when hiring employees. “Sometimes we’re not profitable,” the owner told him. That helped Ein settle on his own, outsourced business model. “You should do as much research as you can on what others in your industry are doing, and how you can streamline your business the best way,” he says.

While Ein isn’t averse to hiring employees, he finds he has the help he needs right now from iPROMOTEu. Meanwhile, he likes knowing he is keeping the people who make items like silk-screen T-shirts for him at other firms busy. “It might not be employees under my business name, but I know we’re putting people to work,” he says.

Don’t be afraid to talk with your competitors. Ein finds it more beneficial to share information freely than to play things close to the vest with rivals. “They are going through the same experiences as you,” he says. For instance, he’s never hesitated to recommend good factories to other firms. They, in turn, have suggested other plants to him. “People who don’t want to share anything hurt themselves,” says Ein. “When you can share ideas you can find resolutions that will help you, as well.”

MONEY Small Business

Tennis Star Andy Murray Ventures Into Crowdfunding Start-Ups

What kind of businesses will the UK tennis star invest in?

TIME Kickstarter

Inventor Raises $120,000 for a Zombie-Fighting Tool on Kickstarter

Laura Natividad—Getty Images/Flickr RF

The invention has a few practical uses too

Americans have plenty to worry about these days, including terrorism, infectious diseases, to the specter of an 18-month-long presidential election.

But entrepreneurs can apparently move a whole bunch of units playing up fears of completely fictional dangers too. That has been inventor Marvin Weinberger’s strategy. He has raised more than $120,000 dollars in a Kickstarter campaign for his new product called the “Lil Trucker,” which he pitched to prospective investors in a video that shows the tool’s capacity to fight off a zombie invasion.

According to the Philadelphia Inquirer, the tool is actually quite useful outside of a zombie combat scenario. The Lil Trucker weighs just 1.3 pounds, but comes loaded with features: “a glass breaker, folding saw, can opener, hatchet blade, hex wrench, pry, wedge, hook, hammer, nail puller, wire twist, gas valve wrench, spanner, and strap cutter.”

Despite the obvious practical uses for such a tool, Weinberg “thought that the tool itself needed something pretty sexy to market it,” according to the report.

Mission accomplished, Marvin.

MONEY Startups

4 Secrets of Crowdfunding Success

Andrew Paterson—Getty Images

Turns out, it's not as easy at it looks.

Driving a tricked out BMW motorcycle with a refrigerated compartment attached like a sidecar, Simon Anguelov earns money to pay for community college in San Diego as a mobile ice cream vendor. The 20-year-old MiraCosta College student took out $30,000 in bank loans to create the customized bike with help from his sister, who cosigned for him.

Recently, it dawned on Anguelov that it would be easier to generate business if there was an Uber-like app people could use to order ice cream deliveries from vendors like him or ice cream stores. In May, he launched a campaign to get funding for IceCreamZilla, an app-enabled network, on the crowdfunding site Kickstarter. Kickstarter enables donation-based crowdfunding, where individuals make donations to business ideas they want to bring to life.

“Ice cream vendors like me would benefit from an app like this,” says Anguelov. “It would draw a lot of business to the industry.”

But Anguelov was in for a surprise. It has been harder than he expected to raise money on Kickstarter. By the time his campaign ended, he had raised only $1,980 toward his $25,000 goal. Under Kickstarter’s rules, that meant he didn’t get to keep any of the money. “It’s really hard to spread the word,” he says.

But he didn’t give up. He restarted his campaign on June 1, this time with a smaller goal of $5,000—and on his first day had already hit $3,015, with 59 days to go.

It’s easy for new entrepreneurs to get excited by the potential to raise money on sites like Kickstarter, where fundraisers have collectively snagged $1.7 billion since it launched in 2009. Some entrepreneurs have hit the jackpot. Pebble Watch, a smartwatch, raised $20.3 million in the site’s most funded campaign to date, and the Coolest Cooler—a picnic accessory that comes with a waterproof Bluetooth speaker—raised $13.2 million, which was good for second place.

And Kickstarter is just one option. In 2014, crowdfunders in North America raised $9.46 billion, a 145% increase from the year before, according to a recent global report from Massolution, a research firm in Los Angeles that collects data from 1,250 active crowdfunding sites around the world. Its data included both donation- and equity-based crowdfunding, where companies typically sell an ownership stake to investors.

Still, as Anguelov discovered, crowdfunding isn’t as easy as the success stories we constantly hear make it sound. Here are four key things to know before you start your campaign.

Successful campaigns start way before the launch. Many crowdfunders start building their following on social networks months before they actually launch a campaign. There’s a reason for this. Crowdfunding campaigns have a time limit. It’s not easy to reach your funding goal if you don’t start working on building up your social media following—a primary way to share these campaigns—until the day you launch.

“It’s hard to get viewers unless you have a presence on Facebook,” says Anguelov, with 20-20 hindsight. “I don’t have any followers.” This time around, he has started building his Facebook following and plans to join groups on the social media site where he can talk about his project. He has also changed his rewards. Previously, he offered discount coupons; this time, he is offering some extras to local donors who pledge $99 or more, such as a chance to meet him and have him personally deliver 25 ice cream treats.

It pays to set realistic goals. Each donation-based site has its own rules, but on some donation-based sites, including Kickstarter, you don’t get to keep any of the donations if you don’t hit your funding goal. However, it is possible on the site to set a stretch funding goal once you meet your initial goal and try to raise additional funds.

Other sites will cut you more slack, but you’ll pay for it. For instance, Indiegogo lets you keep all the money you raise, even if you miss your target. However, it charges a 4% fee if you hit your goal versus 9% if you get part of the way there. That means that if you raise $100,000, you have to pay the site $9,000.

Industry-specific sites may work best if you’re a niche player. If you’re looking to attract the attention of high-net worth investors, equity-based crowdfunding sites that target investors in your sector may be your best bet. Visio Financial Services, a 45-employee company in Austin that was founded in 2011, used this approach. It lends money to private investors who are purchasing single family homes to flip or rent. About a year ago, the firm raised $10 million in a debt facility through the real-estate crowdfunding site Realty Mogul, says CEO Jeff Ball. “There are a lot of accredited investors who have money they would like to invest in alternative asset classes,” he says.

However, gaining entry to such platforms isn’t easy. “It’s getting more crowded,” says Richard Swart, crowdfunding and alternative finance researcher and scholar-in-residence in the Institute for Business and Social Impact at the University of California, Berkeley’s Haas School of Business. “It’s becoming more difficult to attract interest.” Plus, they have little incentive to promote deals that aren’t right for their particular investors. “Many of these platforms are rejecting 90% to 95% of companies seeking funding,” says Swart.

Crowdfunding may not help you get more financing. Getting a bank loan or credit card and making timely payments can help you build a financial track record. But raising money on a crowdfunding site may not carry much weight with future lenders. Ask David Goldin, president and CEO of AmeriMerchant, a New York City firm that provides working capital to small businesses. “It’s irrelevant,” says Goldin. Why? Interest by people who aren’t professional investors or lenders doesn’t necessarily signal to someone like him that a business has staying power. It’s similar to the world outside crowdfunding platforms. “A lot of people invest in a restaurant—and most restaurants fail,” he says.

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