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Planning Your Business Future
(c) 1999-Joel D. Johnson
Failure to plan and not have sufficient working capital, in my view, are the biggest reasons for business failure. Don't hesitate! Get the new business startup help you need. Do it right!
Planning will cause you to examine every aspect of your business idea. It will make you ask question and obtain answers. It will make you ask and explain: Who you are; what your background and experience is; who your partners and or investors are; how many and how much they will own; what the business is and the entity type; what you will be doing, buying, selling manufacturing, etc; what is the product and or service; what you believe the future holds for your type business; where you will be located; where you will obtain funds to service debt if the business folds; why you chose you particular location; why you believe you can be successful; when you will start; why you think your business is unique and needed; how you will finance the business; how much cash you intend to invest in your own business; how much you will need to borrow; how much interest you are willing to pay; how you will repay the proceeds from loans; how you will keep the business going when business is bad; how you will advertise and market your business and much more.
When you plan, you will know what experience you need, what knowledge you need and how much money you will need. No hidden secrets!
Before developing the narrative (explanations), make sure you have determined what the project is going to cost, if the business will cash flow, what the future Income Statements (proforma) will look like and what net profit can be expected. You will also want to prepare a Proforma Balance Sheet to determine the ratios at the beginning of your business and what you project the business will look like for the next 3 years or so. These documents will help you decide on whether or not you want to start your business or continue doing what you are now doing.
You can get the knowledge and experience. In America, there is no excuse for not having the information necessary for success. However, in my experience as a consultant, I find most businesses fail because they simply did not do their pre-business home work. They borrow funds from relatives, invest their savings, and borrow on credit cards with no current plans for obtaining bank financing.
Most try to operate from mental plans hidden somewhere deep in the crevasses of the human cortex. For the most part, incomplete at best. Pretty soon they run out of operating capital and they can't figure out why. Business is good, but there is no money left. Why is that? Finally, when they go to the bank to borrow funds to keep themselves afloat, they find it difficult to obtain the money.
Bankers want to see a good track record. They prefer to deal with businesses that plan and especially those who work their plan. They want close open and honest communications, and current financial statements on a monthly basis.
Most who do pre-startup planning, do it to obtain a bank loan and once the funds are received the plan goes in a file somewhere never again to be looked at or used. Doing this can set you back for years to come.
Look at planning as a road map to success. A business plan is a map that will take you where you want to go, but only if you follow it. It will help you pre-determine the possibilities for reaching those goals and put you on a feasible path.
It is a map that you should refer to consistently. Like the ships Captain, you will not be able to see your destination for at least 99% of the trip, but with good plans you can be assured that you will arrive.
It is best to invest three or four thousand now, in planning and have the assurance that you are heading in the right direction, than to look up and discover you are lost and have no place to turn. When you reach that point in your trip it can be devastating, both mentally and physically. Just ask anyone who has found themselves in that situation.
As I am sure you are aware, there are several good business plan software programs available. We have made available links to software companies we believe to be the best, easiest to understand and to use.
He who fails to plan is planning to fail. Don't fail to plan! That is excellent advice.
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