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Suggest You - 10 Steps for Simplifying Business Plan Financial Statements
Commitment, focus and an action plan are essential components for getting to your goals. Why is that? In my job as a coach I work a lot with small business owners whose success is entirely dependent upon getting to their goals. And so many times their goals are delayed or deferred or reduced or even forgotten. What makes this happen? Often goals are chosen because they are need to or have to. This makes sense in business and in life but there is often a missing ingredient - commitment! What is commitment? It is that part of our brain that takes the need to and want to and converts them to planned reality. To a place where you accept the work and the effort and have the desire to achieve the goal and you are able to see it, feel it,
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing
Niche marketing is the buzz word on the internet but has long held the attention of all advertising and marketing professional in the everyday world of television and radio, even newspapers. If you watch a television show with a large audience of middle aged physically active men, you will find that the commercials aired during that time frame are specifically geared to these men.Think about the Super Bowl. Consider the hype of the unique and yes, very expensive, advertising campaigns that are aired during a football game that is watched by 144.4 million viewers. Yes men and women of all ages and walks of life watch the Super Bowl so there is a variety of ad campaigns but you will see who the marketers are trying to reach – especially with car commercials!The same niche marketing
"Numbers" is the language most investors speak. But, it is also the language that many business owners and entrepreneurs don't speak or understand.
So how do you bridge this gap?
1) Understand there is a difference between "crunching" or preparing the financial statements and presenting them.
Preparing business plan financial statements often requires expert knowledge of double-entry accounting, taxes, merger and acquisition accounting, and finance. Skills most business owners or entrepreneurs don't have, except for perhaps the most seasoned or those with accounting backgrounds. Presenting the numbers, however, only requires that you understand how what you plan to do translates into cash; and, what the potential financial risks for the business are, and how you'll minimize them. If you cannot demonstrate that you understand these, then why would an investor ever give you money?
2) Get help early on.
Okay so you don't have any money to hire a CPA or an accountant, and they just won't do it for nothing. Reach out to your local college. Find the head of the accounting department or an accounting professor. Then, see how your project might be used to help the class learn about accounting, starting a business, or building financial models. The point is; you need someone who understands how to build projected financial statements based on your specific plans for the business. It is also important to find someone who can help you understand your financial statements.
3) Know the kind of investor you are seeking.
This is the same as a writer taking the time to know the audience before writing a book. For example, a banker puts more weight on the business' liquidity, collateral, and ability to convert assets into cash quickly if the business runs into trouble and a loan is called. The emphasis on these financial measures is different for a venture capitalist whose interest is more on how quickly your business can grow, the potential future cash flow it can generate, and the potential for cashing out at an amount much higher than the initial investment.
4) Present only the numbers and measures most important to your type or types of investors in the body of your business plan.
Save the more detailed financial statements for the appendix and due diligence stage. Of course you need detailed financial statements and projections to support your business plan, but don't think you need to share them with potential investors upfront. Investors are more interested in seeing if a few key numbers and financial measures make sense and that they support your strategies before they waste time digging through your supporting data. If they are interested in moving forward with you, believe me, they will dig into your financial statements.
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing i
A company brochure is one of the basic tools in your marketing kit yet so many companies struggle to create an effective brochure that delivers a return on investment for the business.Recently I came across an excellent example of a company brochure developed by Alison Halupka, General Manager of Grant Sheds. Grant Sheds is a family owned business operating from Monash in South Australia. They manufacture and install a wide range of sheds and garages. It is a multi-million dollar business that has been operating for 50 years. Their clients are primarily farmers. Furthermore, through smart service and marketing Grant Sheds continues to earn a price premium in an increasingly commodities market. Their company brochure is one link in that chain.I see a lot of company brochures and mos
2) Get help early on.
Okay so you don't have any money to hire a CPA or an accountant, and they just won't do it for nothing. Reach out to your local college. Find the head of the accounting department or an accounting professor. Then, see how your project might be used to help the class learn about accounting, starting a business, or building financial models. The point is; you need someone who understands how to build projected financial statements based on your specific plans for the business. It is also important to find someone who can help you understand your financial statements.
3) Know the kind of investor you are seeking.
This is the same as a writer taking the time to know the audience before writing a book. For example, a banker puts more weight on the business' liquidity, collateral, and ability to convert assets into cash quickly if the business runs into trouble and a loan is called. The emphasis on these financial measures is different for a venture capitalist whose interest is more on how quickly your business can grow, the potential future cash flow it can generate, and the potential for cashing out at an amount much higher than the initial investment.
4) Present only the numbers and measures most important to your type or types of investors in the body of your business plan.
Save the more detailed financial statements for the appendix and due diligence stage. Of course you need detailed financial statements and projections to support your business plan, but don't think you need to share them with potential investors upfront. Investors are more interested in seeing if a few key numbers and financial measures make sense and that they support your strategies before they waste time digging through your supporting data. If they are interested in moving forward with you, believe me, they will dig into your financial statements.
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing
President Bush has done an excellent job in lowering taxes and strengthening the economy even after the Dot Com bubble burst he had to deal with and the 911 attacks which preceded to eliminate some 7 Trillion Dollars out of the US Stock Market, without any forewarning to investors, corporations or Mutual Fund holders. Recently, President Bush gave a quick speech and interview at the NY Stock Exchange on Corporate CEO pay stating that pay needs to be tied to performance.Obviously, for too long Corporate CEOs have raped companies, while not producing profits or growth. And yes and this speaks to the comments made by detractors about Exxon's CEO Lee and his retirement package. Talk about performance? That is the largest company in the world now and the performance is unheard of. If anyone in
3) Know the kind of investor you are seeking.
This is the same as a writer taking the time to know the audience before writing a book. For example, a banker puts more weight on the business' liquidity, collateral, and ability to convert assets into cash quickly if the business runs into trouble and a loan is called. The emphasis on these financial measures is different for a venture capitalist whose interest is more on how quickly your business can grow, the potential future cash flow it can generate, and the potential for cashing out at an amount much higher than the initial investment.
4) Present only the numbers and measures most important to your type or types of investors in the body of your business plan.
Save the more detailed financial statements for the appendix and due diligence stage. Of course you need detailed financial statements and projections to support your business plan, but don't think you need to share them with potential investors upfront. Investors are more interested in seeing if a few key numbers and financial measures make sense and that they support your strategies before they waste time digging through your supporting data. If they are interested in moving forward with you, believe me, they will dig into your financial statements.
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing
The basic rule is simple: "Find a market need and fill it!" The process of finding the need, and the method chosen to fill it are where the difficulties arise.Based on our opportunity scan, does the market need a product or service that is not currently being provided? Is there a needed product or service currently being provided in a less than satisfactory way? Is some particular market being underserved due to capacity shortages or location gaps? Can we serve any of these needs with some competitive advantage?Remember that a business idea is not a business opportunity until it is evaluated objectively and judged to be feasible. You may wish to choose two to five of the ideas that seem most promising for more detailed study. Trying to consider too many would spread your time, energ
4) Present only the numbers and measures most important to your type or types of investors in the body of your business plan.
Save the more detailed financial statements for the appendix and due diligence stage. Of course you need detailed financial statements and projections to support your business plan, but don't think you need to share them with potential investors upfront. Investors are more interested in seeing if a few key numbers and financial measures make sense and that they support your strategies before they waste time digging through your supporting data. If they are interested in moving forward with you, believe me, they will dig into your financial statements.
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing
Anyone who sells for a living can tell stories about how a deal fell through. No matter how expert or experienced you are, the pang of disappointment that comes when your competition wins is always uncomfortable.Recently Miller Heiman sales consultant Pam Switzer had an opportunity to interview the head of a government-funded Health Center. Pam shares insights straight from a decision-maker - about why a sale was lost.A lost sale Pam tells readers: I’ve been conducting interviews with decision-makers over the past several months with a view towards developing an understanding of how institutions view the sales industry and how we in the industry might be able to provide added value to these organizations.During my interview with the administrator of a government-funde
5) Use graphs and tables wisely to present financial information.
Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing is better than a great graph or table to convey a message clearly and quickly. But remember, a bad graph or table can create much damage and confusion too.
6) Check you numbers.
Like typos, a wrong number can shatter your credibility instantly. It can cause your potential investors to lose confidence in your ability, or to question your understanding of the business. Be sure the numbers in your plan agree to the correct model or version of your financial plan. Verify the numbers in your business plan agree to all supporting documents.
7) Always include a statement of the sources and uses of cash.
If you have teenagers, I'm sure you always ask them where they're going to spend the money you're about to give them, before you hand the money over to them. The Statement of Sources and Uses does the same for investors. It tells potential investors how you plan to use their money. The statement accounts for all the money coming into the deal, whether it is bank debt, seller notes, personal cash, cash proceeds from the sale of stock, and so on. It then explains how you intend to use this money, whether it is to buy an existing business, buy certain assets, payoff existing debt, or payoff certain start-up liabilities, fees, and expenses.
8) Include all three fundamental financial statements: income statement, balance sheet and cash flow.
Don't just provide potential investors with an income statement, it doesn't give them the complete story. Also, be sure that all financial statements conform to Generally Accepted Accounting Principals or GAAP. Include at least three years of actual historical financial information, if available, and five years of projected financial statements. Although no one expects you to be able to predict the future with absolute certainty, projections do provide insight into your thought process, assumptions, and understanding of the business and its markets.
9) Maintain a good financial model capable of running sensitivity analyses to show how your projected results will change as your assumptions change.
This allows you and your investors to identify which assumptions are most critical to your future performance. Each critical assumption needs evidence to support it. Also, include in your model benchmark comparisons to other companies in your industry. Compare things like revenues per employee, gross margin per employee, gross margin as a percentage of revenues, and various expense and balance sheet ratios.
10) Use footnotes and descriptions to explain how key numbers were derived or the specific assumptions be
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