Need a Map for Business Success?
Many cosmetology schools require their students to prepare a business plan as a graduation requirement. As I visit these schools and give seminars on business plans, I can see the utter panic on students faces. They are in cosmetology school to make us beautiful and the thought of all those numbers can be quite overwhelming. One of the main questions I hear is “why do we need to do this”?
The typical answer would be that it is needed to obtain funding for your new business. While that is correct, it is just the beginning of what an excellent business plan can do for you. Taking your time to research material for each section and communicating those facts and figures in an articulate manner is going to prove that you understand how to make money and stay in business. A well written business plan is also the document that can provide a road map for future growth, manage cash flow as well as be a guide when you want to sell or exit your business.
Having a detailed plan will give potential investors a level of confidence in your training and expertise to run the business. You need to assure those investors that you are going to be able to make a profit and repay the loan, because that is their main objective.
The second thing a business plan can do, is to be the road map to your future goals. It is a step by step plan describing your business objectives, legal entity formation as well as what products and services you will provide. You will document the in-depth information you find to substantiate your target market, explaining who they are and how you are going to market to those people. You will need to think about who is going to manage the operation and how are they going to carry out your processes. The detail of your plan will assist you in making decisions about hiring new employees, purchasing assets, creating business alliances and sharing your strategy with those that can help you on your journey. Finally, and probably the most important, you will have your Financial Plan, which includes your Profit & Loss Statement, Cash Flow, Trial Balance, Break Even Analysis as well as Financial Ratios. This is the section that a trusted CPA can become your best friend, because this is the area that tends to be the most difficult due to the many calculations and tax regulations that need to be taken into consideration. These important numbers are going to provide you with the guidelines so you can determine if your business is staying on track to reach your goals, or if you are headed for bankruptcy.
Finally, your plan will include a section on your exit strategy. It sounds silly to be planning this stage of your business when you are just getting started, but here are a few good reasons why it is imperative that you take this seriously. The selling of your business is a goal just like the other goals you have outlined in your plan. If you know what the goal is, you can direct your efforts to improve success, maximize the value of your business, and better understand when and how you should implement your exit strategy. As Stephen R. Covey says, “begin with the end in mind”.
At Excerebus CPA Firm, we are dedicated to educating our family members (clients) to help them reach their goals. To assist as many people as we can, we are in the process of creating webinars and live classes to assist service based entrepreneurs. Please let us know if there are any topics you would be interested in, by using the “contact” tab on this site.
Your success is our success!
Categories: General Business