Posts Tagged documents
The Budget: Definition – part 2
Posted by admin in Companies, budget, expenditures, management skills on July 29th, 2009
Although time periods vary, 12 months is the most common
thinking at best. Anything shorter, while useful, may not anticipate all the bumps in the road a business will face.
The budget your family kept when you were young revolved around savings and expenditures, charting the ebb and flow of resources and supplies. When it comes to a company’s budget, things grow a little more complicated, but the
principles are the same. Budgets predict sales and other revenue (income) and production and operating costs (expenses), and the difference between the two (the company’s profit or loss). The budget is the tool for estimating those numbers, and hopefully help managers prevent losses. And, working in tandem or as part of the business plan, it sets goals for either or both.
Budgeting is that simple. And it’s that important.
The Budget: Definition – part 1
Posted by admin in Companies, Investment Opportunities, budget, management skills on July 29th, 2009
Chances are when you were growing up, your family had a budget, it may have included expense categories such as groceries and clothing, a little cash kept in the sugar bowl or a desk drawer, and an envelope of coupons clipped from the newspaper. That was the first experience most of us had with budgets and, in its simplest form, it’s the quintessential definition of budgeting for business.
Like any other strategic direction and business plan, every company requires a financial plan to face the future. The company and departmental budgets are manifestations of that plan, a year-long look at the peaks and valleys of sales and expenses, the projection of cash flow (or lack of same) and the financial direction a company will take over the next 12 months.
Business Plan Shortfalls – part 2
Posted by admin in Business plans, Companies, Money Tips, management skills on July 29th, 2009
These words of advice are intended to help you avoid problems with lenders and investors. But they are also sound guidelines for your business plan even if you don’t expect it to be read by a single outsider. All the employees of a company—from top managers down to the mail room—are lenders and investors: they lend their abilities and invest their energy in your company. If your business plan fails to support their hopes and inspire them, you risk turning those employees—no matter what their level of responsibility or pay—into wage slaves.
Many business plans are created with a circular approach that offers a summary at both the beginning and the end, using the points in between to enhance the introductory summary so the concluding summary is more complete and comprehensive. For investors, it answers the question, “Why should we invest in this company?” It can save the reader time and give a company a greater opportunity to attract the type of financing it seeks.
Business Plan Shortfalls – part 1
Posted by admin in Business plans, Money Tips, Real estate, management skills on July 29th, 2009
Every good business plan consists of certain elements. But there’s also a list of things that should be avoided when creating a plan:
Inaccuracies will kill any plan. People won’t give money to companies that can’t count. It should go without saying that you need to be absolutely accurate in everything from addition to spelling. (Yes, even spelling, because some people may believe that inattention to accuracy in spelling might be symptomatic of inattention to accuracy elsewhere.)
More is not always better! Plans must be complete but succinct. Plans that run on for pages, with attachments from every financial document generated, generally turn off people who don’t have the time to read them—and today that’s most of us. Answer the questions that likely will be asked, clearly and succinctly. Good move!
Don’t underplay management team skills. The number one reason investors walk away from companies is concern over management. Plans should showcase the strengths of your managers and tie their skills directly to both the needs and solutions for the company. After all, the success of a company cannot be predicted from figures alone. Who is behind those figures? Who will be leading the company toward its goals?
Don’t editorialize. Or, as a colleague liked to put it, “Tell, don’t sell.” Keep the tone of the plan factual and professional. As soon as the plan becomes familiar or promo tional in its flavor, investors are likely to smell a sales pitch and walk.
Don’t just write your plan and shelve it. Use your annual plan to improve company per formance and involve as many of the appropriate staff as possible in developing it.
Business Plan Objectives
Posted by admin in Business plans, Investment Opportunities, Money Tips, Real estate on July 29th, 2009
The first step in developing a business plan is to define its key objective. Is it an annual plan used to drive business operations? Or is it a financial plan designed to attract investors and/or lenders? Is it both? It often is—and that’s not at all bad…if the plan meets everyone’s needs and if the language and goals don’t conflict.
Business plans can take as many forms as necessary and include as many financial addenda as required. Balance sheets and financial reports are usually critical components in a business plan. Some companies seem to attach virtually every financial document available.
Assuming the numbers support the text, however, the real area of interest for most executives, financiers, and even staff will be the assumptions behind the plan. Why is the company expected to sell 150,000 units this year after selling only 50,000 last year? The assumption will make or break the success of the business plan. Show the thinking behind your figures.