Starting a Business: The Business Plan (Pt.3)
Well this week I've been bombarded by finals at my college so I haven't been able to do as much posting as I would of liked. I'm going to begin to explain the first steps in the financial department of setting up a business plan.
A financial plan consists of many things. In this you're going to want to consider projections for income, expenses, and much more. This is the part where I would advise you to hire a professional accountant or financial analyst. However, if you're wanting to do it on your own here's a few tips.
You're going to need to produce projections for what you think your company can reach. I would advise to use a five-year projection plan but a three-year projection plan would most likely work fine. You need these projections for the income you feel you can have coming in, the expenses going out, and even funding sources that you might have got loans from. Now don't just go pulling some random number out of a hat like you're a magician. This takes research, and research is what you'll have to do. Find out historical and industry trends and follow their sales to try and get your projections.
Keep in mind, a financial plan for a business is almost never matched. It could be better, or it could be worse, depending on how much work and effort you put into the plan and follow accordingly. Once you make a financial plan, you need to do your best to stick to it and the keep the budget from drawing into debt.
I would tell most my readers here to, if anything, just expect the expected. If you want to take it further, expect the worst. This way, if the worst does happen, which we all hope it doesn't, then you were at least expecting it. This does happen, but just because it does doesn't mean you should give up! Reconstruct another one that you feel will work better for you. After all, by the time you find out if your first business plan was a success, you'll have experience to build your next one better either way!
I'm going to post the other part of my financial planning for the business plan tomorrow. It will be focusing more on loans and where new businesses can find loans.
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