News Review, Feb 14, 2015
A Business Plan is a representation of your thoughts in a written format that outlines what your plan is. Whether it’s for a start-up or a business expansion, it is a road map toward your success.
Business Plans can change as you go through the process of writing one. Circumstances can change within the business organization. Perhaps what you had envisioned originally did not pan out to be exactly what your intent was or you may have gotten a better idea.
In addition to a business plan, it is generally prepared in conjunction with month by month projections for at least two years. Projections for a start-up can be difficult without historical numbers to rely on. However, projections are just that, a document predicting what may happen in the future based on information gathered. It is really your best guess of what you propose will happen if certain other assumptions take place.
I have found for myself, starting with projecting the expenses works better. This tells me how much sales volume I need in order to pay the expenses to operate the business. And always include a salary or wage for yourself as the owner. Someday you may want to sell the business. A business isn’t worth much if it can’t pay the owner a living wage. Who would buy a seasoned business if they can’t earn an income from it.
In addition, the business plan should include a section called, “WRITTEN ASSUMPTIONS TO THE PROJECTIONS.”
You want to tell the reader how you came up with the numbers. For example, insurance is a pretty easy expense to predict since you would have received a quote from your insurance agent. Explaining that to the reader lets them know you did your homework and provides confidence in other income or expenses predicted.
Business plans and projections are essential when applying for a loan. A Business Plan introduces the reader to your business, what it does, its history, repayment of the loan and future plans to make it grow. It is also a great sales tool for those who may want to invest in the business by providing a clear understanding to the reader that you really have a plan to succeed.
I have seen business plans that are 50-plus pages long and really dread reading them. Sometimes when seeking investors, this in-depth Business Plan may make sense. For the most part, keep it concise, to the point and as short as possible. Keep your feelings out of it and make it a logical document. Sometimes people will say, “I feel, or it should.” Using these kinds of statements can make the reader feel like you are not convinced of its success. Make a clear statement describing confidence in your plan. Everyone knows a business plan is not set in stone, nor the projections will be a perfect match to results. But it tells the reader that you really took the time to think about your business’ future.
The Small Business Development Center can provide you with one-on-one guidance for how to get started on the business plan. The SBDC has some Business Plan outlines that are standard templates and a great projection form used by many lenders, provided by the SBA.
Make an appointment today and see one of the SBDC business advisers. You may even know them, since they are in business as well. SBDC has the help you may need.
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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