Group Business Plan: Finances, Finances, Finances

Posted: December 31st, 2009 | Author: | Filed under: Business, Opportunities, Professional Development | Tags: | No Comments »

Many people are very worried about the financial piece of a business plan, they dont know where to start or how to complete it. But to keep in line with much of what we are doing here (a bare bone business plan FOR YOU so you can conduct business better in 2010).

Well, I went ahead and prepared a template budget. Now this isn’t perfect but this is a start. What you will see in this budget is 7 areas.

  • Administrative
  • Salaries
  • Communication
  • Professional
  • Operating
  • Cost of Goods
  • Other

The xls spreadsheet is set to do the totals and averages for you. Just enter in how much you expect or want to spend in January and then the rest of the spreadsheet will do the math for you.

The big thing for you to look at is the bottom line number. Each column serves as a month so at the bottom you will see how much you need to bring in to meet this goal.

Questions:

  • Calvin, where is the cost of goods?

Being how I didn’t know what your direct costs were, I just made a section called cost of goods. Costs of goods is the actual cost (labor/parts) that it costs to create your product/service. It could be per hour or per product but that cell is for the total amount that you project you will spend on costs of goods.

  • Calvin, I produce the work, I dont pay anyone?

Then you have to see yourself as an owner and as a employee. If you were an employee and you had an hourly salary ($30.00/hr) and on average you have 100 billable hours per month, then that means that your Cost of Goods is $3,000.00. That is the fee just for you as the employee.

The Salary part is what you are paid as the owner of your business. So you might bill out 100 hours a month and take a $750.00/month salary. This way no matter how your billing is, you will pay yourself something (if you are just starting out). Then as you see the bottom total you will see how much you need to bring in.

To treat your business like a business, you have to begin to pay yourself a set salary. If $750.00 is too big, start small. No one will know but you.

  • Calvin what is Exchange Server?

I use an exchange server to manage my email (www.mailstreet.com).

  • Calvin, can i add or delete rows?

Yes, please customize to your hearts content. If you have questions please do not hestiate to ask.

  • Calvin, why do you start your questions to yourself with Calvin?

Because I can and I am cool! :) just playing.

  • Calvin, what is Savings in Operating?

This may not be the best place for it but I feel it is important to build a savings in your business. Whether you are padding your account or moving the money to a business savings account. It is good to begin to build up a cash reserve and the only way to do that is to plan for it.

I would start with the following goals and when you achieve it, work your darnest to never fall down to the goal below.

Goal 1: $1000.00 Pad or 1 Month’s Bills (whatever is greater)
Goal 2: $2500.00 Pad or 3 Month’s Bills (whatever is greater)
Goal 3: $5000.00 Pad or 6 Month’s Bills (whatever is greater)
Goal 4: $10,000.00 Pad or 12 Month’s Bills (whatever is greater)

When you reach $10k then it is time to speak with your banker about other ways to store your money and getting a better return.

So have fun and let me know if you have questions. :)

C.

PS. There is one more part of this bare bones business plan and we are good to go.

Mind you this isn’t perfect but hopefully for those who haven’t ever planned for a year you can use this as just a general tool to figure out how much you need to gross per month.

There are more sophisticated tools and always a CPA :).

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