Business Plan and Financials

Transcription

1 Business Plan and Financials KIMBERLY FRELOW SMALL BUSINESS MANAGER

2 THE BUSINESS PLAN Your Roadmap to Success Your map to success in the business world You will gain in-depth knowledge about your industry Helps you find hidden business flaws and makes you think carefully It will show you what is involved in making your business work successfully A tool to helping you achieve your own business/personal goals

3 Why Should You Write a Business Plan? To be more efficient To put your mind at ease To secure your ideas To have a plan of action

4 Who Needs A Business Plan? Every Business Owner If you are starting a new business. Buying an existing business. Financing or refinancing a business. Thinking about becoming an independent contractor for a company. Thinking about selling a product or service you invented. Thinking about making extra money.

5 Most Common Concerns How long does it take to complete the business plan? Where will I get my information from? What are the benefits of doing a business plan If I have a great business plan can I be certain of getting funding through the SBA or investors or a bank? How quickly can I get funded once I have a business plan?

6 Which Plan Do You Use? Ask yourself what is the business plan for? Strategic planning? Marketing? Financing? *You will need a business plan to secure a loan.

7 Key Components Of The Plan Executive Summary Business Description Mission Statement Vision Statement Industry Trends Marketing Management Team Operations Financial Data

8 Executive Summary A.K.A. Cover Letter Gives a snapshot of the business and the management staff. Summarizes the entire business plan in one or two pages. Usually accompanies a request financing.

9 Business Description Capability Statement Years in Business Key Personnel Firm Expertise License Number Clients Served

10 Mission Statement A mission statement is a formal, short, written statement of the purpose of a company or organization. It should guide the actions of the organization, spell out its overall goals, and provide a sense of direction.

11 Vision Statement A vision statement provides inspiration, the basis for all the organization's planning.

12 Sample Mission Statement Kimberly and Associates, Inc. is a for-profit business training and consulting firm; dedicated to providing youth and adults with excellent services and resources that will result in their ability to attain a job or launch a business.

13 Sample Vision Statement The vision of Kimberly and Associates, Inc. is to provide advantaged and disadvantaged youth and adults with lifelong skills and information needed to succeed in the areas of business management, ownership and gainful employment.

14 Industry Trends Provide an overview of the industry include the following information: What trends are being followed in your particular industry? How are consumers responding now and historically? Where are the opportunities -- are their benefits for being eco-friendly or providing green products?

15 Marketing Plan What are you offering a product or service? Competition Target Market Marketing Strategy Marketing budget Advertising Unique Position Social Media Linkedin Facebook YouTube

16 Operations Business Structure Sole Proprietor Partnership Corporation *Depending on how the business is set-up will determine how the business will operate day-to day.

17 FINANCIALS Are You Prepared For Public Contracting? Initial Capital Needs: Calculating initial capital needs begins with a sales projection and cost of operations to run the business. Capitalization is the activity of ramping up the business with all of the equipment and personnel necessary to operate or grow a business.

18 Start-up Costs Personnel Equipment

19 Public Works -- Capital Needs Administrator Prequalification/Certifications Union Fees $29, Estimator $48, Field Supervision $46, Accounting Payroll Reporting $36, Labor Compliance Officer $24, Equipment $ Trucks $ Supplies $

20 Expenses In addition to capital costs, you will have an increase in monthly cost of operating the business. What is this cost? You must focus on your Job Cost to ensure you are not exceeding your estimated bid. What system will you use to keep track of your cost?

21 Cash Flow A cash flow statement is a month-bymonth projection of financial activities. This analysis allows you to prepare for potential cash flow problems. A cash flow statement tells you what your business s cash position really is.

22 Initial Operating Expenses Item Monthly Cost Rent $ Utilities $ Payroll $ Automobiles $ Insurance/Bond $ Advertising $ Phones $ Union Fees $ Equipment $

23 Financial Records Entrepreneurs should maintain their own daily and monthly accounting records and use accountants for preparing tax returns and formal financial statements.

24 Business Plan (cont. d) Financial Statements The business plan for a new business should include a pro forma financial statement. A pro forma financial statement describes the expected financial status of a business at a future date.

25 Income Statements An income statement shows the revenues and the expenses of a business over a specified period of time. It also shows the business s profits. New business owners should make pro forma income statements for the first year of operation as well as for future years (usually the first three).

26 Simplified Pro Forma Income Statement

27 Balance Sheets A balance sheet is a financial statement that shows the worth, or value, of a business. A pro forma balance sheet projects the growth of a business in terms of how much capital value the business will have at a particular date in the future.

28 Balance Sheets (continued) The assets side shows all property and capital to which the business claims ownership. The liabilities side shows all the debts of the business. The net worth of a business is determined by adding all the value of what is owned and subtracting from this the total debt of the business.

29 Assets Current assets include cash and assets that are easily converted into cash, such as inventory and accounts receivable. Fixed assets are those capital purchases that generally take a longer time to convert or liquidate into cash, such as property, equipment, and fixtures that require a special buyer.

30 Liabilities Current liabilities are debts that are to be paid within 12 months of the date of the balance sheet. Longterm liabilities are usually debts that come due more than 12 months after the date of the balance sheet.

31 Simplified Pro Forma Balance Sheet

32 Financial Records Small business owners should have access to Income and expense register Accounts payable ledger Accounts receivable ledger Furniture, fixture, and equipment ledger Notes payable ledger Payroll records