Current services offered by The Sorcerer’s Accountant include:
Tax Services:
Management/Cost Accountant Services:
QuickBooks Services
Current services are either provided entirely by Max Greenwood or available through resources on the The Sorcerer’s Accountant website. Greenwood will provide referrals to credit card processing companies or some speciality consultants when the need calls for it, but focuses his work on general small business services of use to the widest variety of businesses.
The Sorcerer’s Accountant intends to add the following bookkeeping services :
These bookkeeping services will be at a rate of $30 per hour/per bookkeeper for clients. Clients would pay $20 -$25, once benefits and taxes are factored in, for an in-house, part-time bookkeeper, and would still be responsible for training, oversight, and management in that case. The Sorcerer’s Accountant’s rate is very economical once this is taken into account.
The new services will be performed by part-time student bookkeepers who are current undergraduate accounting majors with up to 20 hours per week free to work. Each business will have a consistent bookkeeper assigned to it. The bookkeepers will be trained by Max Greenwood directly in proper techniques. They will all be students in the top 20% of their class with at least one professional recommendation and one educational (professor) recommendation. This is a business model which has been successful in other cities where there is ample student labor, such as New York City.
To add additional value, the bookkeeping manager, a graduate student pursuing an MBA in accounting, will supervise and audit the work of the bookkeepers, answering their questions when questions arise, and providing quality assurance. The bookkeeping manager will review the QuickBooks files and reports created by the bookkeepers to ensure that they follow proper formats and are prepared correctly.
The small business accounting market consists of virtually every small business in the United States. As businesses grow larger than one person sole proprietorships, they generally require expert help with at least their tax preparation, and often with additional bookkeeping and accounting services. Even many non-employer sole proprietorships will use accounting help at some point. While some small businesses hire bookkeepers or CFOs directly, many successfully outsource these types of services.
The accounting service market as a whole includes the following:
The market of small businesses in Chicago for The Sorcerer’s Accountant represents approximately 85,000 businesses in 2010. It has been divided into three groups:
Non-employer firms: Without employees, these firms do not have many of the concerns of larger businesses. However, the owners must be vigilant to protect their own tax liability and sort out how their personal and business tax returns intersect. These firms are generally buyers of QuickBooks services and tax preparation services. As they grow, this group becomes ripe for outsourced bookkeeping services before they can hire an full-time in-house bookkeeper.
Very small businesses: Made up of businesses that are designed to stay small and those which are growing through a phase, these businesses require payroll services, bookkeeping, and tax preparation. They are concerned about losing control, but can generally be convinced of using outsourced accounting and bookkeeping with cost analysis. With the stakes higher, these businesses can make greater use of management accounting services, especially as most cannot afford a dedicated CFO. Many do not need a full-time bookkeeper, but can make do with part-time help, which limits their hiring options.
Other small businesses: Many of these businesses will have some in-house financial management and bookkeeping help. However, they may be able to save money by outsourcing these services, as they are not generally core to what the business seeks to do. These businesses may be comfortable with their situation as a cash producer for their owners or intent on growing or positioning themselves for sale.
Market Analysis | |||||||
2010 | 2011 | 2012 | 2013 | 2014 | |||
Potential Customers | Growth | CAGR | |||||
Non-employer Firms | 4% | 50,000 | 52,000 | 54,080 | 56,243 | 58,493 | 4.00% |
Very Small Businesses (2 to 10 employees) | 4% | 25,000 | 26,000 | 27,040 | 28,122 | 29,247 | 4.00% |
Other Small Businesses (11 to 99 employees) | 4% | 10,000 | 10,400 | 10,816 | 11,249 | 11,699 | 4.00% |
Total | 4.00% | 85,000 | 88,400 | 91,936 | 95,614 | 99,439 | 4.00% |
The Sorcerer’s Accountant will focus on the “very small business” target group for its bookkeeping services as this group can make the most consistent use of part-time bookkeepers. The type of student bookkeepers whom these businesses would hire are generally students of the same kind. However, these businesses often do not have the resources to provide proper oversight or training to their bookkeepers, and will suffer from not having the leverage to hire the cream of the crop. The Sorcerer’s Accountant can provide the solution to these problems.
The small business accounting industry consists of numerous independent accountants and bookkeepers as well as many small firms. Larger firms tend to pursue medium and large business clients.
Accounting and bookkeeping services are purchased by owners and top managers of small businesses. They will contact businesses by phone and generally meet in person (at the client’s office) to interview and discuss the prospect of working together.
Major competitors in the Chicago market include:
For bookkeeping services, the business also must compete indirectly against the prospect of businesses hiring their own part-time bookkeepers. This gives businesses the advantage of greater control and perhaps development of a future full-time employee. If the hire works out, the cost can be lower for a business than an outside service. However, this can lead to employees who are not as well-educated or experienced as bookkeepers through a bookkeeping service who have worked with a range of businesses. Generally, the cost is lower in the long run with a bookkeeping service, as training is done more systematically and supervisors are more regimented and experienced.
To choose between competitors, factors considered by clients include:
The website for The Sorcerer’s Accountant presents a simple, uncluttered look which holds a great deal of information about services offered beneath its surface and beyond its homepage. The purpose of the website is to assure clients and potential clients of the expertise of the company and then inspire them to call for a phone or in-person consultation.
To redevelop the website for the new bookkeeping services to be offered, additional service pages will be created for each subset of the bookkeeping service as well as a main page presenting the value proposition and benefits to clients of the services. All areas will offer description to be clear about what services are and are not offered, but will be focused on client benefits.
To market the website, many of the current tactics will be maintained, but supplemented.
Most of these marketing activities will be executed by the marketing services firm contracted by Sorcerer’s Accountant as Greenwood does not have the time or expertise to execute them himself.
The website will be expanded with additional information about best practices of bookkeeping services. Max Greenwood will devote 40 hours to developing this content within two months of the launch of the service.
The website redevelopment will require the marketing service partner for the business to create new pages based on the template already set by the existing website. All copy will be written by Max Greenwood. Graphics and design elements will be added by the marketing partner. There is not a need for e-commerce, a back-end, or other functionality for the website.
To promote the business to its target of businesses with 2 to 10 employees, The Sorcerer’s Accountant will:
The Sorcerer’s Accountant will achieve a competitive edge among Chicago bookkeeping services due to its combination of CPA oversight with lower-level, inexpensive labor. Clients will receive the advantage of having a CPA review their books and propose additional advice when appropriate, while not paying much more than they would to hire their own part-time bookkeeper.
This is not an inimitable competitive edge, but the market in Chicago is large enough to allow for the success of Sorcerer’s Accountant with this strategy. Large firms ignore the small business market because they are better positioned to serve larger businesses. They are unlikely to imitate this strategy as they will find it difficult to convince small businesses that they can offer services which are affordable to them.
The Sorcerer’s Accountant will use the following marketing tactics to reach its target market of very small businesses (2 to 10 employees) with its new bookkeeping services:
The marketing messages will focus on the economics of the decision to use outsourced bookkeepers from The Sorcerer’s Accountant and the advantage of CPA oversight with Greenwood’s experience and track record.
Marketing also encompasses the search for student bookkeepers. Job listings will be posted at local universities and promote the learning involved in the position and the "leg up" it can give students for accounting positions upon graduation. We will recruit the best student bookkeepers possible. The costs associated with this hiring are only the time of Max Greenwood.
The sales strategy for The Sorcerer’s Accountant’s new bookkeeping services is to attempt to sell the service predominantly to existing clients, especially at first before marketing pays off with new inquiries. This will require Max Greenwood to inform all existing clients by phone about the idea, once he has determined that they are qualified to use the service. Whenever possible, clients will be approached during regularly scheduled calls and meetings so as to not require a great deal of additional prospecting time.
Greenwood will then ask clients directly for referrals to other businesses and business owners they know who may be right for the bookkeeping services. Greenwood will seek to contact two referrals per day. When and if existing clients and referrals are exhausted, Greenwood will engage in cold calling to likely prospects he has heard about from other businesses.
The result of this initiative of direct selling is expected to be at least five clients within the first couple of months, as many current Sorcerer’s Accountant clients appear extremely ready for this service and trusting of Max Greenwood.
Unit prices represent the average project cost for tax services ($750), cost accounting projects ($1,000), and QuickBooks services ($300). Bookkeeping services are set at $30 per hour. Direct unit costs are very low for all of these services as they are primarily labor services. Tax projects incur a 5% cost for printing and travel, cost accounting projects incur 3% cost, primarily for travel. QuickBooks services are generally given remotely and sales of QuickBooks are done directly to the vendor (Greenwood Accounting receives a commission on software sold). Bookkeeping services incur a 50% cost of sales as the bookkeepers are paid at $15 per hour.
Total sales are expected to rise significantly with the success of the bookkeeping services revenue stream. The existing revenue streams are projected to grow at slow rates, as Max Greenwood cannot take on much additional work. They are not projected to grow at all in 2010, as Greenwood will spend additional time on the establishment of the bookkeeping services. Furthermore, these revenues will drop by 20% in the first quarter as additional time is spent by Greenwood on hiring, training and launching this revenue stream.
The sales forecast assumes part-time bookkeepers working 20 hours per week. These will grow from 2 bookkeepers working below capacity at the start of 2010 to 3 by the end of 2010, to 4 in 2011 and 8 by the end of 2012. Revenues will begin in the second month after training in the first month of 2010. This growth rate is made possible by the intention to do everything possible to retain clients and grow with them, as well as to actively seek referrals to other businesses from each client. Two levels of oversight (Greenwood’s oversight over the Bookkeeping Manager, and the Bookkeeping Manager’s oversight over all bookkeepers) will improve quality assurance and the chances of a high level of client retention and satisfaction.
Direct cost of sales are very low for the business as most costs are fixed. Travel to client sites, printing and paper, and other direct supplies for clients are the only direct costs for services provided directly by Greenwood. The direct labor of student bookkeepers for the bookkeeping services is $15 per hour, or 50%. Wages for non-billable hours (training periods) for new bookkeepers are listed in the Personnel table.
Sales Forecast | |||
2010 | 2011 | 2012 | |
Unit Sales | |||
Tax Preparations | 125 | 130 | 135 |
Cost Accounting Analysis | 60 | 63 | 65 |
QuickBooks Services | 57 | 59 | 62 |
Bookkeeping Hours | 1,570 | 3925 | 7850 |
Total Unit Sales | 1,812 | 4,177 | 8,112 |
Unit Prices | 2010 | 2011 | 2012 |
Tax Preparations | $750.00 | $750.00 | $750.00 |
Cost Accounting Analysis | $1,000.00 | $1,000.00 | $1,000.00 |
QuickBooks Services | $300.00 | $300.00 | $300.00 |
Bookkeeping Hours | $30.00 | $30.00 | $30.00 |
Sales | |||
Tax Preparations | $93,600 | $97,500 | $101,250 |
Cost Accounting Analysis | $60,300 | $63,000 | $65,000 |
QuickBooks Services | $17,100 | $17,700 | $18,600 |
Bookkeeping Hours | $47,100 | $117,750 | $235,500 |
Total Sales | $218,100 | $295,950 | $420,350 |
Direct Unit Costs | 2010 | 2011 | 2012 |
Tax Preparations | $37.50 | $37.50 | $37.50 |
Cost Accounting Analysis | $30.00 | $30.00 | $30.00 |
QuickBooks Services | $0.00 | $0.00 | $0.00 |
Bookkeeping Hours | $15.00 | $15.00 | $15.00 |
Direct Cost of Sales | |||
Tax Preparations | $4,680 | $4,875 | $5,063 |
Cost Accounting Analysis | $1,809 | $1,890 | $1,950 |
QuickBooks Services | $0 | $0 | $0 |
Bookkeeping Hours | $23,550 | $58,875 | $117,750 |
Subtotal Direct Cost of Sales | $30,039 | $65,640 | $124,763 |
To execute the milestones listed, Max Greenwood will make liberal use of an outside marketing service firm (OF denotes outside firm on the table) which will manage the execution of the marketing activities listed. Greenwood will directly execute the sales activities listed through his work with clients.
$4,000 of these costs will be incurred at the end of 2009 and are included in operating costs on the past performance table.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Redevelop Website | 12/1/2009 | 1/1/2010 | $2,500 | MG (OF) | Marketing |
List Website on Databases | 1/1/2010 | 1/15/2010 | $500 | MG (OF) | Marketing |
Change Yellow Pages ads | 1/1/2010 | 1/15/2010 | $500 | MG (OF) | Marketing |
Search Engine Marketing | 1/1/2010 | 12/31/2010 | $12,000 | MG (OF) | Marketing |
Expand Website Best Practices Section | 12/1/2009 | 2/28/2010 | $0 | MG | Marketing |
Redevelop Brochure | 12/1/2009 | 1/1/2010 | $1,000 | MG (OF) | Marketing |
Print New Brochures | 1/1/2010 | 1/15/2010 | $3,000 | MG (OF) | Marketing |
Promotion to Clients | 1/1/2010 | 1/31/2010 | $0 | MG | Sales |
Promotion to Client Referrals | 2/1/2010 | 2/28/2010 | $0 | MG | Sales |
Develop Print Ad | 12/1/2009 | 12/15/2009 | $500 | MG (OF) | Marketing |
Run first print ads | 2/1/2010 | 2/15/2010 | $5,000 | MG (OF) | Marketing |
Totals | $25,000 |
Max Greenwood is CEO and sole manager of The Sorcerer’s Accountant. With the launch of bookkeeping services, Greenwood will oversee a part-time bookkeeping manager who will oversee the work of the bookkeepers. The manager will be in an MBA or MS accounting program with professional work experience and bookkeeping experience, preferably at the start of his or her graduate school program so that he or she can work through the program’s two years and then be considered for a move to a full-time position in year three. This manager will work from the Sorcerer’s Accountant office or remotely, checking in with the bookkeepers by email and phone to remain apprised of the situations and problems they are facing. The manager will be present for the bookkeepers’ training by Max Greenwood, so he or she will be aware of their responsibilities and requirements.
Periodically, the manager will visit the bookkeepers on-site and also request to audit their work directly to spot any problems before they become issues for the clients. Any issues with the bookkeepers will be reported by the clients to the bookkeeping manager directly. He will either handle them himself or report to Greenwood for help.
Greenwood will remain in close contact with the bookkeeping manager and review work samples from the bookkeepers at least once a month.
Direct cost wages for student bookkeepers’ billable hours are listed in the Sales Forecast. The wages shown for student bookkeepers in this table represent only training periods (non-billable hours) when new bookkeepers join the business. We will start with two part-time bookkeepers at the start of 2010, and increase to three midyear, adding a fourth in the second year and doubling the student bookkeeping staff to eight total in the third year.
Employee benefits are 10% of payroll and are provided only for the management.
Personnel Plan | |||
2010 | 2011 | 2012 | |
Bookkeeper training-period wages | $1,200 | $400 | $1,600 |
Max Greenwood | $60,000 | $65,000 | $70,000 |
Bookkeeper Manager | $24,000 | $28,800 | $48,000 |
Benefits | $8,400 | $9,380 | $11,800 |
Total People | 5 | 6 | 10 |
Total Payroll | $93,600 | $103,580 | $131,400 |
The financial plan of the business requires growth financed by positive cash flows from operations. Additional outside investment or owner investment is not necessary. The new business line is not capital-intensive, but will increase fixed costs of the business which must be covered almost immediately by additional revenues from bookkeeping sales. This is feasible because it is expected that at least five current clients will use the service without hesitation as they are ready to start using a bookkeeper or outsource their current bookkeeping.
The business will grow the number of part-time bookkeepers with the business over these next three years. In the first year, two bookkeepers will work at less than 20 hours per week each for several months before reaching capacity, and a third bookkeeper will join us mid-year. A fourth part-time bookkeeper will be added in year two, and four more will be added in year three.
Our monthly revenue break-even is based on the fixed costs of running the current business along with the old lines of business. This is a significant increase from the 2009 break-even point. The increased marketing activity, capacity, payroll, benefits, and computer expenses for the new bookkeeper, insurance for the new line of business, and cost of sales to hire bookkeepers drives this break-even point higher.
Break-even Analysis | |
Monthly Units Break-even | 141 |
Monthly Revenue Break-even | $16,926 |
Assumptions: | |
Average Per-Unit Revenue | $120.36 |
Average Per-Unit Variable Cost | $16.58 |
Estimated Monthly Fixed Cost | $14,595 |
The Sorcerer’s Accountant actually expects its gross margin to fall as it takes on bookkeepers to fulfill the new bookkeeping service. This will move from the firm’s gross margin from being in line with a non-employer firm to a contractor firm that provides labor to businesses. The growth in revenues will offset this drop in gross margin and produce steady growth in net profit. Marketing will include the activities listed for 2010 in the milestones table as well as additional runs of print ads in local publications beyond the first few months. This expense will drop somewhat in future years as marketing returns to the business’s focus on referrals and word-of-mouth from clients.
Rent and utilities will not grow significantly, as only Greenwood and the bookkeeping manager will work out of the office space. Insurance will grow to cover the added liability of additional employees working in client spaces. Payroll taxes are set at 15% of payroll and the bookkeeping labor items. Employee benefits are 10% of payroll and are provided only for the management. January will be a month of additional setup training to bring the new bookkeepers and manager online and install additional software and computers. Software and computer expenses to provide accounting software for the laptops of student bookkeepers and to continue to upgrade the systems of the business will grow. In the first year, this includes a computer and software set-up for the bookkeeping manager.
Pro Forma Profit and Loss | |||
2010 | 2011 | 2012 | |
Sales | $218,100 | $295,950 | $420,350 |
Direct Cost of Sales | $30,039 | $65,640 | $124,763 |
Other Cost of Sales | $0 | $0 | $0 |
Total Cost of Sales | $30,039 | $65,640 | $124,763 |
Gross Margin | $188,061 | $230,310 | $295,588 |
Gross Margin % | 86.23% | 77.82% | 70.32% |
Expenses | |||
Payroll | $93,600 | $103,580 | $131,400 |
Marketing/Promotion | $38,500 | $20,000 | $20,000 |
Depreciation | $0 | $0 | $0 |
Rent | $18,000 | $18,720 | $19,469 |
Utilities | $2,400 | $2,496 | $2,596 |
Insurance | $5,000 | $7,000 | $8,000 |
Payroll Taxes | $14,040 | $15,537 | $19,710 |
Software and Computer Expenses | $3,600 | $4,000 | $6,000 |
Total Operating Expenses | $175,140 | $171,333 | $207,175 |
Profit Before Interest and Taxes | $12,921 | $58,977 | $88,413 |
EBITDA | $12,921 | $58,977 | $88,413 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $3,876 | $17,693 | $26,524 |
Net Profit | $9,045 | $41,284 | $61,889 |
Net Profit/Sales | 4.15% | 13.95% | 14.72% |
The expansion of the business can be undertaken with the current cash reserves, even accounting for a cash loss over $10000 in February, 2010 as the marketing and set-up expenses for the new business line must be paid. The business will return to positive cash-flow in the second quarter. The fact that the part-time bookkeepers will only be deployed on paying jobs lowers the risk of this new business line to the cost of the bookkeeping manager and marketing. Significant cash reserves can be built up in future years for an acquisition or additional service expansion or the owner can take dividends as shown.
Pro Forma Cash Flow | |||
2010 | 2011 | 2012 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $109,050 | $147,975 | $210,175 |
Cash from Receivables | $105,612 | $144,145 | $204,055 |
Subtotal Cash from Operations | $214,662 | $292,120 | $414,230 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $214,662 | $292,120 | $414,230 |
Expenditures | 2010 | 2011 | 2012 |
Expenditures from Operations | |||
Cash Spending | $93,600 | $103,580 | $131,400 |
Bill Payments | $111,643 | $149,376 | $220,816 |
Subtotal Spent on Operations | $205,243 | $252,956 | $352,216 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $20,000 | $60,000 |
Subtotal Cash Spent | $205,243 | $272,956 | $412,216 |
Net Cash Flow | $9,418 | $19,164 | $2,013 |
Cash Balance | $29,418 | $48,582 | $50,596 |
The net worth of the business will improve if the new business line succeeds as expected. Additional external financing will not be needed and the debt of the business will remain low.
Pro Forma Balance Sheet | |||
2010 | 2011 | 2012 | |
Assets | |||
Current Assets | |||
Cash | $29,418 | $48,582 | $50,596 |
Accounts Receivable | $10,730 | $14,560 | $20,680 |
Other Current Assets | $5,000 | $5,000 | $5,000 |
Total Current Assets | $45,148 | $68,142 | $76,276 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $45,148 | $68,142 | $76,276 |
Liabilities and Capital | 2010 | 2011 | 2012 |
Current Liabilities | |||
Accounts Payable | $10,708 | $12,418 | $18,663 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $10,708 | $12,418 | $18,663 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $10,708 | $12,418 | $18,663 |
Paid-in Capital | $10,000 | $10,000 | $10,000 |
Retained Earnings | $15,396 | $4,441 | ($14,276) |
Earnings | $9,045 | $41,284 | $61,889 |
Total Capital | $34,441 | $55,724 | $57,613 |
Total Liabilities and Capital | $45,148 | $68,142 | $76,276 |
Net Worth | $34,441 | $55,724 | $57,613 |
The Sorcerer’s Accountant is compared here to the “Office Administrative Services” industry of under $500,000 in revenues. Comparison to the other closest industry, “Tax Preparation Services,” is less useful because of the differences created by the new revenue line.
Sorcerer’s Accountant does not hold substantial current or long-term assets, besides some office equipment and a rental security deposit. The assets of the business are primarily the human and knowledge assets of Max Greenwood, and the resources presented on the Sorcerer’s Accountant website which are not recognized here. This explains the differences in asset ratios.
Gross margins will be higher than industry averages, as employees will be contracted directly to clients only for the bookkeeping services and not for the accounting services of the business. However, S G & A will be higher than the industry averages because of the need for an extra level of management to oversee the employees.
Ratio Analysis | ||||
2010 | 2011 | 2012 | Industry Profile | |
Sales Growth | 24.63% | 35.69% | 42.03% | 3.34% |
Percent of Total Assets | ||||
Accounts Receivable | 23.77% | 21.37% | 27.11% | 14.34% |
Other Current Assets | 11.07% | 7.34% | 6.56% | 53.58% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 70.11% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 29.89% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 23.72% | 18.22% | 24.47% | 37.94% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 54.53% |
Total Liabilities | 23.72% | 18.22% | 24.47% | 92.47% |
Net Worth | 76.28% | 81.78% | 75.53% | 7.53% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 86.23% | 77.82% | 70.32% | 59.56% |
Selling, General & Administrative Expenses | 82.08% | 63.87% | 55.60% | 28.35% |
Advertising Expenses | 17.65% | 6.76% | 4.76% | 1.21% |
Profit Before Interest and Taxes | 5.92% | 19.93% | 21.03% | 8.19% |
Main Ratios | ||||
Current | 4.22 | 5.49 | 4.09 | 1.24 |
Quick | 4.22 | 5.49 | 4.09 | 1.18 |
Total Debt to Total Assets | 23.72% | 18.22% | 24.47% | 92.47% |
Pre-tax Return on Net Worth | 37.52% | 105.84% | 153.46% | 696.33% |
Pre-tax Return on Assets | 28.62% | 86.55% | 115.91% | 52.41% |
Additional Ratios | 2010 | 2011 | 2012 | |
Net Profit Margin | 4.15% | 13.95% | 14.72% | n.a |
Return on Equity | 26.26% | 74.09% | 107.42% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 10.16 | 10.16 | 10.16 | n.a |
Collection Days | 29 | 31 | 31 | n.a |
Accounts Payable Turnover | 10.78 | 12.17 | 12.17 | n.a |
Payment Days | 29 | 28 | 25 | n.a |
Total Asset Turnover | 4.83 | 4.34 | 5.51 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.31 | 0.22 | 0.32 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $34,441 | $55,724 | $57,613 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.21 | 0.23 | 0.18 | n.a |
Current Debt/Total Assets | 24% | 18% | 24% | n.a |
Acid Test | 3.21 | 4.31 | 2.98 | n.a |
Sales/Net Worth | 6.33 | 5.31 | 7.30 | n.a |
Dividend Payout | 0.00 | 0.48 | 0.97 | n.a |
Sales Forecast | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Unit Sales | |||||||||||||
Tax Preparations | 8 | 10 | 11 | 16 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | |
Cost Accounting Analysis | 5 | 4 | 2 | 2 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | |
QuickBooks Services | 4 | 4 | 4 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | |
Bookkeeping Hours | 0 | 50 | 70 | 90 | 100 | 120 | 140 | 160 | 180 | 200 | 220 | 240 | |
Total Unit Sales | 17 | 67 | 88 | 113 | 121 | 141 | 161 | 181 | 201 | 221 | 241 | 261 | |
Unit Prices | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Tax Preparations | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | $750.00 | |
Cost Accounting Analysis | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | |
QuickBooks Services | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | $300.00 | |
Bookkeeping Hours | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | |
Sales | |||||||||||||
Tax Preparations | $6,000 | $7,200 | $8,400 | $12,000 | $7,500 | $7,500 | $7,500 | $7,500 | $7,500 | $7,500 | $7,500 | $7,500 | |
Cost Accounting Analysis | $4,800 | $3,600 | $2,400 | $1,500 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | |
QuickBooks Services | $1,200 | $1,200 | $1,200 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | |
Bookkeeping Hours | $0 | $1,500 | $2,100 | $2,700 | $3,000 | $3,600 | $4,200 | $4,800 | $5,400 | $6,000 | $6,600 | $7,200 | |
Total Sales | $12,000 | $13,500 | $14,100 | $17,700 | $18,000 | $18,600 | $19,200 | $19,800 | $20,400 | $21,000 | $21,600 | $22,200 | |
Direct Unit Costs | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Tax Preparations | 5.00% | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 | $37.50 |
Cost Accounting Analysis | 3.00% | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 | $30.00 |
QuickBooks Services | 0.00% | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Bookkeeping Hours | 50.00% | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 | $15.00 |
Direct Cost of Sales | |||||||||||||
Tax Preparations | $300 | $360 | $420 | $600 | $375 | $375 | $375 | $375 | $375 | $375 | $375 | $375 | |
Cost Accounting Analysis | $144 | $108 | $72 | $45 | $180 | $180 | $180 | $180 | $180 | $180 | $180 | $180 | |
QuickBooks Services | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Bookkeeping Hours | $0 | $750 | $1,050 | $1,350 | $1,500 | $1,800 | $2,100 | $2,400 | $2,700 | $3,000 | $3,300 | $3,600 | |
Subtotal Direct Cost of Sales | $444 | $1,218 | $1,542 | $1,995 | $2,055 | $2,355 | $2,655 | $2,955 | $3,255 | $3,555 | $3,855 | $4,155 |
Personnel Plan | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Bookkeeper training-period wages | $800 | $0 | $0 | $0 | $0 | $0 | $400 | $0 | $0 | $0 | $0 | $0 | |
Max Greenwood | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | |
Bookkeeper Manager | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
Benefits | 10% | $700 | $700 | $700 | $700 | $700 | $700 | $700 | $700 | $700 | $700 | $700 | $700 |
Total People | 4 | 4 | 4 | 4 | 4 | 4 | 5 | 5 | 5 | 5 | 5 | 5 | |
Total Payroll | $8,500 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 | $8,100 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 |
Pro Forma Profit and Loss | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Sales | $12,000 | $13,500 | $14,100 | $17,700 | $18,000 | $18,600 | $19,200 | $19,800 | $20,400 | $21,000 | $21,600 | $22,200 | |
Direct Cost of Sales | $444 | $1,218 | $1,542 | $1,995 | $2,055 | $2,355 | $2,655 | $2,955 | $3,255 | $3,555 | $3,855 | $4,155 | |
Other Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $444 | $1,218 | $1,542 | $1,995 | $2,055 | $2,355 | $2,655 | $2,955 | $3,255 | $3,555 | $3,855 | $4,155 | |
Gross Margin | $11,556 | $12,282 | $12,558 | $15,705 | $15,945 | $16,245 | $16,545 | $16,845 | $17,145 | $17,445 | $17,745 | $18,045 | |
Gross Margin % | 96.30% | 90.98% | 89.06% | 88.73% | 88.58% | 87.34% | 86.17% | 85.08% | 84.04% | 83.07% | 82.15% | 81.28% | |
Expenses | |||||||||||||
Payroll | $8,500 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 | $8,100 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 | |
Marketing/Promotion | $10,000 | $3,000 | $3,000 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Rent | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | |
Utilities | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | |
Insurance | $5,000 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Payroll Taxes | 15% | $1,275 | $1,155 | $1,155 | $1,155 | $1,155 | $1,155 | $1,215 | $1,155 | $1,155 | $1,155 | $1,155 | $1,155 |
Software and Computer Expenses | $2,500 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | |
Total Operating Expenses | $28,975 | $13,655 | $13,655 | $13,155 | $13,155 | $13,155 | $13,615 | $13,155 | $13,155 | $13,155 | $13,155 | $13,155 | |
Profit Before Interest and Taxes | ($17,419) | ($1,373) | ($1,097) | $2,550 | $2,790 | $3,090 | $2,930 | $3,690 | $3,990 | $4,290 | $4,590 | $4,890 | |
EBITDA | ($17,419) | ($1,373) | ($1,097) | $2,550 | $2,790 | $3,090 | $2,930 | $3,690 | $3,990 | $4,290 | $4,590 | $4,890 | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Taxes Incurred | ($5,226) | ($412) | ($329) | $765 | $837 | $927 | $879 | $1,107 | $1,197 | $1,287 | $1,377 | $1,467 | |
Net Profit | ($12,193) | ($961) | ($768) | $1,785 | $1,953 | $2,163 | $2,051 | $2,583 | $2,793 | $3,003 | $3,213 | $3,423 | |
Net Profit/Sales | -101.61% | -7.12% | -5.45% | 10.08% | 10.85% | 11.63% | 10.68% | 13.05% | 13.69% | 14.30% | 14.88% | 15.42% |
Pro Forma Cash Flow | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $6,000 | $6,750 | $7,050 | $8,850 | $9,000 | $9,300 | $9,600 | $9,900 | $10,200 | $10,500 | $10,800 | $11,100 | |
Cash from Receivables | $7,492 | $6,025 | $6,760 | $7,110 | $8,855 | $9,010 | $9,310 | $9,610 | $9,910 | $10,210 | $10,510 | $10,810 | |
Subtotal Cash from Operations | $13,492 | $12,775 | $13,810 | $15,960 | $17,855 | $18,310 | $18,910 | $19,510 | $20,110 | $20,710 | $21,310 | $21,910 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $13,492 | $12,775 | $13,810 | $15,960 | $17,855 | $18,310 | $18,910 | $19,510 | $20,110 | $20,710 | $21,310 | $21,910 | |
Expenditures | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Expenditures from Operations | |||||||||||||
Cash Spending | $8,500 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 | $8,100 | $7,700 | $7,700 | $7,700 | $7,700 | $7,700 | |
Bill Payments | $7,419 | $15,396 | $6,775 | $7,203 | $8,219 | $8,360 | $8,747 | $9,065 | $9,530 | $9,920 | $10,310 | $10,700 | |
Subtotal Spent on Operations | $15,919 | $23,096 | $14,475 | $14,903 | $15,919 | $16,060 | $16,847 | $16,765 | $17,230 | $17,620 | $18,010 | $18,400 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $15,919 | $23,096 | $14,475 | $14,903 | $15,919 | $16,060 | $16,847 | $16,765 | $17,230 | $17,620 | $18,010 | $18,400 | |
Net Cash Flow | ($2,427) | ($10,321) | ($665) | $1,057 | $1,936 | $2,250 | $2,063 | $2,745 | $2,880 | $3,090 | $3,300 | $3,510 | |
Cash Balance | $17,573 | $7,252 | $6,588 | $7,645 | $9,580 | $11,830 | $13,893 | $16,638 | $19,518 | $22,608 | $25,908 | $29,418 |
Pro Forma Balance Sheet | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $20,000 | $17,573 | $7,252 | $6,588 | $7,645 | $9,580 | $11,830 | $13,893 | $16,638 | $19,518 | $22,608 | $25,908 | $29,418 |
Accounts Receivable | $7,292 | $5,800 | $6,525 | $6,815 | $8,555 | $8,700 | $8,990 | $9,280 | $9,570 | $9,860 | $10,150 | $10,440 | $10,730 |
Other Current Assets | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 |
Total Current Assets | $32,292 | $28,373 | $18,777 | $18,403 | $21,200 | $23,280 | $25,820 | $28,173 | $31,208 | $34,378 | $37,758 | $41,348 | $45,148 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $32,292 | $28,373 | $18,777 | $18,403 | $21,200 | $23,280 | $25,820 | $28,173 | $31,208 | $34,378 | $37,758 | $41,348 | $45,148 |
Liabilities and Capital | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Current Liabilities | |||||||||||||
Accounts Payable | $6,896 | $15,170 | $6,536 | $6,929 | $7,941 | $8,069 | $8,446 | $8,747 | $9,200 | $9,577 | $9,954 | $10,331 | $10,708 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $6,896 | $15,170 | $6,536 | $6,929 | $7,941 | $8,069 | $8,446 | $8,747 | $9,200 | $9,577 | $9,954 | $10,331 | $10,708 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $6,896 | $15,170 | $6,536 | $6,929 | $7,941 | $8,069 | $8,446 | $8,747 | $9,200 | $9,577 | $9,954 | $10,331 | $10,708 |
Paid-in Capital | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 | $10,000 |
Retained Earnings | ($83,554) | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 | $15,396 |
Earnings | $98,950 | ($12,193) | ($13,154) | ($13,922) | ($12,137) | ($10,184) | ($8,021) | ($5,970) | ($3,387) | ($594) | $2,409 | $5,622 | $9,045 |
Total Capital | $25,396 | $13,203 | $12,241 | $11,474 | $13,259 | $15,212 | $17,375 | $19,426 | $22,009 | $24,802 | $27,805 | $31,018 | $34,441 |
Total Liabilities and Capital | $32,292 | $28,373 | $18,777 | $18,403 | $21,200 | $23,280 | $25,820 | $28,173 | $31,208 | $34,378 | $37,758 | $41,348 | $45,148 |
Net Worth | $25,396 | $13,203 | $12,241 | $11,474 | $13,259 | $15,212 | $17,375 | $19,426 | $22,009 | $24,802 | $27,805 | $31,018 | $34,441 |
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Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.
If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.
Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.
You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.
Let’s get started.
Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.
One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.
For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.
A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.
Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.
A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:
A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.
You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.
A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.
Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.
You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.
You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.
Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.
In your business plan, your marketing strategy must answer the questions:
1. create your executive summary.
The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.
A good executive summary should do the following:
The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.
Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.
View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:
Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.
The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.
If you are writing your business plan for your planning purposes, you do not need to write the executive summary.
The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.
Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.
Your company overview should contain the following:
When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.
If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.
After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.
The company description or overview section contains three elements: mission statement, history, and objectives.
The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.
Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”
When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:
When you fill in this information, you use it to write one or two paragraphs about your company’s history.
Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.
The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.
Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.
This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.
Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?
You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.
Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?
Illustrate the competitive landscape as well. What are your competitors doing well and not so well?
Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.
Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.
Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.
The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.
A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.
To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.
The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.
Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.
You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.
How to Quantify Your Target Market
One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:
What Does a Good Market Analysis Entail?
Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.
You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:
The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.
Here are some questions you can answer that can help you position your product or service in a positive light to your readers.
Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.
In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.
Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.
Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.
The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.
Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.
When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.
Find answers to the following questions after you have identified who your competitors are.
If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.
If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.
Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.
The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.
Direct vs Indirect Competition
You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.
There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.
If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.
In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.
For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.
There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.
Factors that Differentiate Your Business from the Competition
There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.
1. Cost Leadership
A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.
A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.
2. Product Differentiation
Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.
Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.
3. Market Segmentation
As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.
If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.
The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.
Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.
If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.
Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.
The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.
Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.
The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.
Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.
A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.
Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.
Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.
If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.
1. Avoid Adding ‘Ghost’ Names to Your Management Team
There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.
Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.
2. Focus on Credentials But Pay Extra Attention to the Roles
Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.
While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.
Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.
If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.
An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.
You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.
In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.
Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.
The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.
If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”
Your product and service section in your business plan should include the following:
In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.
When describing the benefits of your products or services, here are some key factors to focus on.
When describing the product life cycle of your products or services, here are some key factors to focus on.
When describing the production process for your products or services, you need to think about the following:
1. Avoid Technical Descriptions and Industry Buzzwords
The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.
A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.
2. Describe How Your Products or Services Differ from Your Competitors
When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.
If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.
For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.
3. Long or Short Products or Services Section
Should your products or services section be short? Does the long products or services section attract more investors?
There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.
If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.
Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.
The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.
If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.
A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.
4. Describe Your Relationships with Vendors or Suppliers
Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.
Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.
5. Your Primary Goal Is to Convince Your Readers
The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.
When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.
While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.
Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.
Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.
You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.
Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.
The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.
There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.
In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.
The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).
Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.
Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.
Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.
Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.
Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.
Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.
Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?
Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market
After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.
All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.
Here is a simple template you can use to develop a positioning statement.
For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].
For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.
“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”
You can edit this positioning statement sample and fill it with your business details.
After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.
Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.
You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.
Basic Rules to Follow When Pricing Your Offering
Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.
Pricing Strategy
Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.
After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.
As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.
There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.
Advertising
Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.
Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.
Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.
A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.
Public Relations
A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.
Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.
Content Marketing
Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,
Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.
Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.
If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.
Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.
When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.
Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.
You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.
Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.
Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.
You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.
If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.
Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.
The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.
Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.
1. Focus on Your Target Market
Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.
2. Evaluate Your Competition
One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.
You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.
These questions can help you know your competition.
3. Consider Your Brand
Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.
4. Focus on Benefits
The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.
Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.
5. Focus on Differentiation
Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.
You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.
The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.
If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’
A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.
Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.
In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.
Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.
If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.
When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.
Case for Equity
If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.
Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.
Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.
Case for Debt
You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.
When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.
Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.
Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.
You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.
The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.
If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.
You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.
If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .
Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.
If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.
The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.
If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.
Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.
If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.
When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.
The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.
Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.
Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.
The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.
Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.
Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.
You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.
The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.
A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.
Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.
1. Sales Forecast
Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.
One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.
For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.
Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.
Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.
For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.
2. Personnel Plan
The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.
However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.
The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.
3. Income Statement
The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.
Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.
The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.
4. Cash Flow Statement
The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.
5. Balance Sheet
The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.
You can get the net worth of your company by subtracting your company’s liabilities from its assets.
6. Exit Strategy
The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.
You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.
Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.
Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.
Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.
You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.
Here are some key questions to answer to help you develop this section.
Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.
The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.
When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.
Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.
You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.
If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.
A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.
The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.
People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.
The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:
Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.
To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.
When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.
The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.
Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.
Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.
To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.
When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.
Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.
The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.
In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.
The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.
To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.
When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.
One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.
Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.
You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.
To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.
A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.
For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.
To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.
This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:
Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.
When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.
You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.
In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.
Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.
1. hubspot's one-page business plan.
The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.
Hubspot’s one-page business plan template is divided into nine fields:
Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.
The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.
HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.
The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.
There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.
My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.
The comprehensive template consists of a whopping 15 sections.
There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.
Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.
The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.
There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.
The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.
The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .
There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.
The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.
There are five sections in the two SBA’s free business plan templates.
The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.
There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.
The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.
There are 11 sections in PandaDoc’s free business plan template.
You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)
PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.
InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.
Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.
A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.
Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.
The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.
The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.
The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.
The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.
Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:
While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.
Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.
Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.
Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.
Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.
It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.
Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.
Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time. They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.
Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans. A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.
A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs. Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.
The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.
A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.
Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.
Martin luenendonk.
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.
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1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.
A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.
LLC Formation
A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.
Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .
» Need help writing? Learn about the best business plan software .
This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.
Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.
» MORE: How to write an executive summary in 6 steps
Next up is your company description. This should contain basic information like:
Your business’s registered name.
Address of your business location .
Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.
Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.
Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.
» MORE: How to write a company overview for a business plan
The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.
If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.
For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.
» MORE: How to write a successful business plan for a loan
In this section, go into detail about the products or services you offer or plan to offer.
You should include the following:
An explanation of how your product or service works.
The pricing model for your product or service.
The typical customers you serve.
Your supply chain and order fulfillment strategy.
You can also discuss current or pending trademarks and patents associated with your product or service.
Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.
Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.
Include details about your sales and distribution strategies, including the costs involved in selling each product .
» MORE: R e a d our complete guide to small business marketing
If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.
Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:
Net profit margin: the percentage of revenue you keep as net income.
Current ratio: the measurement of your liquidity and ability to repay debts.
Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.
This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.
This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.
Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.
Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.
NerdWallet’s picks for setting up your business finances:
The best business checking accounts .
The best business credit cards .
The best accounting software .
Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.
If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.
Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:
Licenses and permits.
Equipment leases.
Bank statements.
Details of your personal and business credit history, if you’re seeking financing.
If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
with Fundera by NerdWallet
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are some tips to write a detailed, convincing business plan:
Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.
Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.
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Written by Dave Lavinsky
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their accounting firms.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an accounting business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
A business plan provides a snapshot of your accounting business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
If you’re looking to start an accounting firm or grow your existing accounting business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your accounting business to improve your chances of success. Your accounting business plan is a living document that should be updated annually as your company grows and changes.
With regards to funding, the main sources of funding for an accounting firm are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for accounting firms.
How to write a business plan for an accounting firm.
If you want to start an accounting business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your accounting business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of accounting business you are running and the status. For example, are you a startup, do you have an accounting business that you would like to grow, or are you operating an established accounting business you would like to sell?
Next, provide an overview of each of the subsequent sections of your plan.
In your company overview, you will detail the type of accounting business you are operating.
For example, you might specialize in one of the following types of accounting firms:
In addition to explaining the type of accounting business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
In your industry or market analysis, you need to provide an overview of the accounting industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the accounting industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your accounting business plan:
The customer analysis section of your accounting business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, organizations, government entities, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of accounting business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
Don’t you wish there was a faster, easier way to finish your business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are othe r accounting firms.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes CPAs, other accounting service providers, or bookkeeping firms. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a accounting business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type o f accounting company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide auditing services, tax accounting, bookkeeping, or risk accounting services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your accounting company. Document where your company is situated and mention how the site will impact your success. For example, is your accounting business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your accounting marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your accounting business, including answering calls, scheduling meetings with clients, billing and collecting payments, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your accounting business to a new city.
To demonstrate your accounting business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing accounting businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an accounting business or bookkeeping firm.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance s heet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you see 5 clients per day, and/or offer discounts for referrals ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your accounting business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a accounting business:
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of your most prominent clients. Summary Writing a business plan for your accounting business is a worthwhile endeavor. If you follow the accounting business plan example above, by the time you are done, you will truly be an expert. You will understand the accounting industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful accounting business.
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When you are starting a small business or a startup, you will need to make financial projections for your business.
Financial plan in business plan helps understand the chances of your business becoming a financial success. Investors want to see a financial plan to know how much money they’ll invest and what the expected return over investment is for them.
We have briefly discussed the process of writing a financial plan in business plan. One thing that can make or break your financial plan in business plan is your honesty about numbers.
Try not to be over-optimistic. See the growth pattern of similar businesses and project closely to them. Don’t overestimate the effects of your competitive advantage.
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A financial plan in business plan is an overview of your business financial projections.
Business plan financial projections include financial reports including Profit & Loss, cash flow statement, and balance sheet.
A financial plan will also discuss sales forecast, employees’ salaries and other expenses forecast, business breakeven analysis, and important business rations that help measure growth.
A business plan financial section is about making simple forecasts and creating a few financial reports. You don’t need to know accounting, nor is it necessary for creating financial projections.
We have outlined and simplified the process of creating a financial plan for business plan. Simply follow the process and take help from our examples and templates to write an excellent financial plan section of a business plan.
You have set business goals in your business plan. A strategic plan is how you will navigate to financial success.
Everything in a business plan that contributes toward your business goals. Before writing financial projections, consider these goals and milestones:
Financial projections in a business plan will include the following:
We will explore each in detail in the following section. By the end of the article, you will fully understand how to create financial plan in business plan.
A profit and loss statement is the first financial report you will create when writing financial plan in business plan.
A profit and loss statement reports your business income or loss over a certain period of time.
Profit and loss statement is also known by other names including its short form i.e., P & L statement, income statement, and pro forma income statement.
A profit and loss statement includes total revenues, expenses, and costs. A P&L statement is made for different time intervals like quarterly, bi-annual and annual. It shows net income after the cost of goods sold, expenses, taxes, depreciation, and amortization.
Before creating a P&L statement for your business, you may need to look for the right format for your business structure. For example, you will need a different format for a profit and loss statement for a sole proprietorship and a different one for an LLC.
Check income statement examples to understand and create one yourself.
Download our free profit and loss statement templates & examples, and make a professional income statement for financial plan in business plan.
Every profit and loss statement includes the following elements:
Depending on the business type, a P&L statement may include insurance, taxes, depreciation, and amortization. Make sure to include a forecast for all heads in financial plan in business plan.
Start your profit and loss statement by calculating operating income; use this formula.
Gross Margin – Operating Expenses = Operating Income
Typically, operating income is equal to EBITDA (earnings before interest, taxes, depreciation, and amortization).
Operating income is also called the gross profit and it does not deduce taxes or other accounting adjustments from the income.
Use this formula to calculate net income.
Operating Income – (Interest + Taxes + Depreciation + Amortization Expenses) = Net Income
A cash flow statement is typically prepared every month. You can create monthly and quarterly cash flow statement in financial plan in business plan.
A cash flow statement informs about the cash your business brought income, the cash it paid out, and how much is still available with the bank.
A cash flow statement gives an understanding of your income sources and expenses. When you forecast your financial reports, a cash flow statement will show your expected income sources and expenses.
A cash flow statement will help potential lenders and investors understand how you plan to make money. It provides reliable data about cash in and cash out. Keep it realistic and in line with the industry number for the most part. An exception may be an innovation or a breakthrough you bring to the market.
Your profit and cash flow are not the same. It is possible to have a cashless, profitable business or a business in loss with plenty of cash. A good cash flow helps you keep your business open and turn things around.
A cash flow statement also reflects your behavior with money. It shows if you spend on spur of the moment or think strategically. When creating a cash flow statement in a business plan, you will need to understand two basic concepts of accounting; cash accounting and accrual accounting.
Check our extensive library of business templates for small businesses and make use of the templates and examples in writing your business plan.
The difference between cash and accrual accounting is Accrual accounting records revenues/income and expenses when they occur while cash accounting records income/revenue and expenses when the money actually changes hands.
You will need to decide if you will use cash accounting or accrual accounting. However, the final choice will depend on your business type and product.
For example, you are selling tickets to a show or you are taking preorders for your new product. Under cash accounting, you will record all income now and expenses when you have actually shipped the product or organized the show.
However, with accrual accounting, you will record both income and expenses when you have shipped the product or held the show.
Here, cash accounting will show the months with cash abundance as profitable and the months of spending, like shipping of the products of event organization, as a loss. It is hard to see a pattern and get actionable insight with cash accounting.
It is a good time to decide about the accounting method you will use when you are writing a financial plan in business plan.
Check with your accounting consultant and discuss accrual and cash accounting to select the one most suitable for your business.
A balance sheet is a summary of the financial position of your business.
A balance sheet includes assets, liabilities, and equity. A balance sheet is based on this formula and it is always equal on both sides of the equation.
Assets = Liabilities + Equity
Here, Assets include your inventory, cash at hand and bank, property, vehicles, accounts receivables, etc. Liabilities are debts, loans and account payables. Equity includes shares proceeds, retained earnings, and owner’s money.
Download Balance Sheet Template from WiseBusinessPlan and make a balance sheet easy.
A sales forecast is your projection about the sales you will make in a certain time. Investors and lenders will be interested in seeing your sales forecast. They will estimate your chances of meeting the forecast and projections.
Keep your sales forecast consistent with the financial reports like the cash flow statement and profit & loss statement.
First, decide the period for the sales forecast, like one month or a quarter. Then, do the following steps to make a sales forecast for that period.
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A personnel plan shows the costs and value of the employees you will hire.
Very small businesses, startups, or solopreneurs may not need a personnel plan but any business with employees, or plans to hire employees, will need this.
Forecast the cost of each employee and the value they will provide. You don’t need to discuss everything about employees, just do a short cost-benefit analysis for each position or employee.
Breakeven analysis tells you the number of sales you need to bring in to cover all of your business expenses.
Use this formula to calculate the breakeven point for your business.
Break-Even Point (units) = Fixed Costs / (Sales price per unit – Variable costs per unit)
Business ratios are like signals for your business. You can quickly spot a growth or fall with a ratio. Some business ratios also help you see business health.
You are not required to include business ratio forecasts however, it is good to know about them when writing a business plan.
Here are some of the most used business ratios.
One mistake that most people make is thinking that building a business plan is a one time thing.
Your business plan and your financial projections can help you measure your business growth. You can use these numbers as a yard stick to see if you are meeting your projections or not.
Here is how you can your business plan as a management tool for your business.
Schedule monthly and quarterly business review meetings. Compare your actual data for that period with your forecast data and see how you are moving towards your business goals. Adjust your forecast or projections with the help of actual data to keep your growth trajectory in the right direction.
Frequently asked questions (faqs).
The financial section of a business plan should include key financial statements such as the income statement, balance sheet, and cash flow statement. It should also provide details on projected sales, expenses, and profitability, along with any assumptions or financial ratios used.
Forecasting sales and revenue involves analyzing market research, understanding your target audience, and considering factors such as pricing, competition, and marketing strategies. Utilize historical data, industry benchmarks, and realistic growth assumptions to estimate future sales figures.
In addition to sales and revenue projections, the financial section should include projected expenses, such as operational costs, marketing expenses, and overheads. It should also outline anticipated profits, cash flow projections, and return on investment (ROI) calculations.
Yes, including a break-even analysis is important as it helps determine the point at which your business will start generating profits. It identifies the sales volume needed to cover all expenses and provides insights into the viability of your business.
Supporting documents may include historical financial statements, tax returns, cash flow statements, balance sheets, and any other relevant financial records. Additionally, include details about any loans, investments, or funding sources that contribute to the financial projections.
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You’re driving late at night, exhausted. You can’t see anything, and you don’t know where you are. Before you run out of gas, you pull up your GPS, and ah! There’s the path. Now you know where the path is again. Likewise, you can get lost in business ownership if you don’t have a “roadmap” guiding you (aka a business plan). That’s why you need to know how to write a business plan.
Creating and updating a business plan helps you understand your market, obtain small business financing , and strategize your company’s future. But, writing a small business plan takes time and resources.
You might be wondering, How do I write a small business plan? What does a business plan look like? Let’s get started, shall we?
Download our FREE guide, Use Financial Statements to Assess the Health of Your Business , to learn about these statements and how to use them.
There are typically nine sections in a traditional business plan outline. But, the business plan template may vary between companies.
Take a look at how to draft a business plan with the following sections:
Learn more about how to write a business plan step-by-step by checking out the sections below.
Your executive summary should concisely explain the key points of your business. Keep your summary short and sweet. It should outline the rest of your business plan, not repeat it.
Use this first section of your small business plan to answer (briefly):
Consider waiting until you’re done writing a business plan to craft your executive summary. For some, summarizing is easier than expanding.
Like the executive summary, the company description is a brief summary of the scope of your business.
When creating a business plan, use this section to go into detail about who runs your business, how it’s structured, and where it’s located. Include your mission statement and talk about how your company fills a marketplace need.
Your company description should answer:
Use the company description as an opportunity to make your business look good and grab any lenders’ and investors’ attention early on.
The market analysis portion of your plan details your market, target customers, and competition. To find this information, you need to do some research.
Find out your competitors’ strengths and weaknesses. Learn which demographics you plan to target. Analyze the size of the market you want to penetrate.
Questions you should answer in your market analysis include:
Like the title of this section suggests, you need to do a bit of analyzing to fully understand the scope of your market, the current players in it, and how your business fits in (or how it stands out).
Now is the time to get into the nitty-gritty details of your business’s structure and leadership. So, what structure makes the most sense for your business?
You can structure your company as a:
Compare the advantages and disadvantages of each business structure before choosing. Explain why you chose this structure in your business plan.
Next, list the names of the people running your business. Describe the strengths, skills, and experience of business leaders. Delegate roles and responsibilities to each leader. For example, if you form a partnership, explain each partner’s role.
Use your organization and management section to answer:
Now for the fun part of your business plan—what you’re going to sell. If you’re like most business owners, you’re likely more excited about running your company than structuring it.
This section of your business plan defines your offerings and explains how they benefit your customers. Also, discuss your offerings’ unique value proposition. Explain what sets your products or services apart from the rest of the market (hint: refer back to your findings from the market analysis!).
You products and services section should answer the following questions:
You may have a great product or service, but it doesn’t matter if nobody knows about it. Cue marketing and sales.
This section of your business plan should explain how you plan to market to potential customers. Will you use online marketing strategies, such as social media and email campaigns? Or, do you plan to use offline strategies, like radio ads and direct mail? Lay out exactly what combination of marketing and sales strategies you plan to pursue.
Use this section to answer the following questions:
If you plan on using your business plan to obtain outside financing, here’s your chance. Define your funding needs in this section of your plan.
Knowing how to make a business plan to secure funding requires you to give the lowdown on your financing needs, plans for funding, and desired repayment terms.
Your funding request should answer questions like:
Use this section of your business plan to show investors or lenders exactly what you’re asking for and how you plan on protecting their money.
Use this section to lay out your business’s future finances to help you budget. Use historical data to estimate financial projections, if applicable.
When coming up with your financial projections, work within time periods. You want to be as specific as possible. And, avoid overestimating your small business revenue. Also, be prepared to answer what you’ll do if you don’t reach your financial projections.
Some financial questions to answer in this section include:
The last part of knowing how to write a business plan is tying up any loose ends. Add any additional attachments to the appendix section of your plan.
Some documents you may need to provide include:
Now that you know how to prepare a business plan with the basic sections, follow these tips to bring it home.
Research might not be your favorite thing in the world. But before you start a business or write your plan, you need to make research your new best friend.
From conducting a thorough market analysis to deciding the best structure for your venture, research is a must.
Without researching your idea, you could set your business up for failure. Know what you’re getting into so you don’t wander blindly into an oversaturated market or dying industry.
Resources to use:
After doing the necessary research and writing, make your plan stand out by prioritizing presentation. Here are some do’s and don’ts when it comes to putting together the components of a business plan:
How long should your presentation be? There is no set business plan length. According to the Small Business Administration, experts recommend keeping the business plan between 30 – 50 pages. Avoid writing just to write. Answer what you need to and keep your plan concise.
Done writing your small business plan? Great! But, that doesn’t mean you can set it on your bookshelf to collect dust. You need to revisit your small business plan from time to time.
Businesses grow constantly. As your company develops and changes, you must also update your business plan with new:
Consider looking at your small business plan annually or whenever your venture changes.
Resources to use:
This article has been updated from its original publication date of March 5, 2019.
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About pro forma statements, financial planning & capital budget.
Business plans usually represent a formal written document created by an entrepreneur to outline specific features of a small business idea. These plans may be short and simple or contain copious amounts of detailed information depending on the small business idea. Entrepreneurs may be hesitant to write a business plan because it requires time and effort planning a business rather than conducting operations and making a profit.
Business plans contain different sections of information relating to the entrepreneurs' small business idea. This plan usually includes a vision statement, information on consumer goods or services produced by the business, the entrepreneur’s management ability, economic market analysis and information relating to the financial needs of the new business venture. The financial and accounting information, and the small business plan is an important piece for entrepreneurs when planning future financial expectations to start the business.
The financial and accounting business plan section may include a detailed list of items needed to start the business. Equipment, vehicles, facilities, inventory, employees and similar startup items may be included in this section. The cost of each startup item is listed along with an aggregate total for all items. Entrepreneurs may also create a list of anticipated monthly expenses, including items such as utilities, insurance, marketing and other operational items, to ensure enough capital is on hand during the early business months.
Entrepreneurs use the financial and accounting business plan section to secure outside financing from lenders or investors. Lenders and investors carefully analyze the entrepreneur’s business plan to assess the investment strength of the new business venture. Most entrepreneurs need significant funding to start and run the business. If banks or other lenders refuse to lend the entrepreneur money, private investment firms or venture capitalists may be another option for external financing.
Entrepreneurs may need to seek the advice of other individuals in the economic marketplace when running their business plan. This insight may come from current business owners, economic analysts, if management consultants, the local chamber of commerce and the Small Business Administration (SBA). These resources may provide valuable information for the entrepreneur to plan the financial and accounting features of their small business venture.
Failing to properly plan for the financial needs of a new small business may create difficult situations when starting the business. The inability to secure sufficient amounts of external financing may leave the entrepreneur with no option but to finance the business using personal wealth. Using personal wealth may lower the entrepreneur as quality of life, and create more stress and worry that is not associated with the small business.
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Seven sections your business plan should have.
Joseph is Director at Wise Business Plans , a firm helping clients with professionally written business plans, branding, licensing and more.
To someone who’s never done it before, crafting a business plan can seem like a complicated, magical process that regular people are incapable of accomplishing. The finished product looks so complex and informative — who even knows what goes into something like that?
But, in reality, business plans are less like magic and more like baking. Gather the right ingredients, put them together in the proper order, and ta-da! The finished product is a road map for the company’s future success.
With a little help from a professional or the right recipe, even the newest small-business owner will be baking up business plans in no time.
So, what is that recipe for planning perfection? Like bread and pastry, every business plan has some flair of its own, from custom graphic design to unique financial information.
But some sections are universal and absolutely necessary if a business owner wants to be taken seriously by investors and banks.
1. An Executive Summary
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This concise, carefully written, first section of the plan offers an easy-to-follow introduction to the company, its purpose and its framework. This section sums up the information in your plan, so it can be helpful to go back and write it after the rest of the work is completed.
Pro Tip: In the opening statement, explain the business in one or two sentences. Once you have completed your business plan, write the Executive Summary last.
2. Company Overview
List the goods and services the company will provide, the market it will serve, short- and long-term goals for growth and a brief history of the company’s formation and past performance.
Pro Tip: Explain any momentum the company has made to date and future plans.
3. Products & Services
This section allows for a more complete explanation of the kinds of goods or services the business will be selling or providing. Make the descriptions compelling and engaging.
Pro Tip: List a detailed description of your products or services and their competitive advantages over the competition.
4. Market Analysis
Use this as an opportunity to showcase the research and knowledge company leaders have to bring to the table with regard to the people and entities they hope to serve or sell to. Include information on the industry the company belongs to and the state of the competition locally, nationally and even internationally, if relevant.
Pro Tip: Check out the census website for statistics and demographics.
5. Marketing Strategy
How does the business intend to get the word out about what it has to offer? This section should list plans for all expected marketing channels, from traditional advertising to social media outreach efforts.
Pro Tip: The marketing budget and strategy should be a focal point of your plan. This will ultimately drive sales.
6. Organization & Management
This can be broken into separate sections, but both leadership and plans for employees must be addressed. This should include a basic visual “tree” showing the number of employees expected to be hired, as well as the reporting structure for those people. The management portion should contain an introduction to the company’s leaders and their expertise and career achievements.
Pro Tip: Explain why you and your team are capable of executing the business goals and objectives.
7. Financials
Different kinds of plans will require slightly different financial information. However, every plan should show historical financial data, if available, and sensible projected expenditures and forecasted income. This section should also include an overview of the company’s current financial status.
Pro Tip: Every industry has a set of key performance indicators (KPIs). Benchmark your company against its peers in the market.
It’s a fact that a quality business plan contains complicated information about not only the business being built but also the market and industry the company plans to compete in. Looking at a business plan as a piece-by-piece process, rather than a completed whole, can make creating your own a little less daunting. Including the seven sections listed above is a great starting point for making a plan that will impress any investor or financial institution.
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Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.
Internal management team, external management resources, human resources, frequently asked questions (faqs).
When developing a business plan , the 'management section' describes your management team, staff, resources, and how your business ownership is structured. This section should not only describe who's on your management team but how each person's skill set will contribute to your bottom line. In this article, we will detail exactly how to compose and best highlight your management team.
This section outlines the legal structure of your business. It may only be a single sentence if your business is a sole proprietorship. If your business is a partnership or a corporation, it can be longer. You want to be sure you explain who holds what percentage of ownership in the company.
The internal management section should describe the business management categories relevant to your business, identify who will have responsibility for each category, and then include a short profile highlighting each person's skills.
The primary business categories of sales, marketing , administration, and production usually work for many small businesses. If your business has employees, you will also need a human resources section. You may also find that your company needs additional management categories to fit your unique circumstances.
It's not necessary to have a different person in charge of each category; some key management people often fill more than one role. Identify the key managers in your business and explain what functions and experience each team member will serve. You may wish to present this as an organizational chart in your business plan, although the list format is also appropriate.
Along with this section, you should include the complete resumés of each management team member (including your own). Follow this with an explanation of how each member will be compensated and their benefits package, and describe any profit-sharing plans that may apply.
If there are any contracts that relate directly to your management team members, such as work contracts or non-competition agreements, you should include them in an Appendix to your business plan.
While external management resources are often overlooked when writing a business plan , using these resources effectively can make the difference between the success or failure of your managers. Think of these external resources as your internal management team's backup. They give your business credibility and an additional pool of expertise.
An Advisory Board can increase consumer and investor confidence, attract talented employees by showing a commitment to company growth and bring a diversity of contributions. If you choose to have an Advisory Board , list all the board members in this section, and include a bio and all relevant specializations. If you choose your board members carefully, the group can compensate for the niche forms of expertise that your internal managers lack.
When selecting your board members, look for people who are genuinely interested in seeing your business do well and have the patience and time to provide sound advice.
Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.
Professional Services should also be highlighted in the external management resources section. Describe all the external professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches. These professionals provide a web of advice and support outside your internal management team that can be invaluable in making management decisions and your new business a success .
The last point you should address in the management section of your business plan is your human resources needs. The trick to writing about human resources is to be specific. To simply write, "We'll need more people once we get up and running," isn't sufficient. Follow this list:
After you've listed the points above, describe how you will find the staff your business needs and how you will train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you will recruit staff.
When you're writing about staff training, you'll want to include as many specifics as possible. What specific training will your staff undergo? What ongoing training opportunities will you provide your employees?
Even if the plan for your business is to start as a sole proprietorship, you should include a section on potential human resources demands as a way to demonstrate that you've thought about the staffing your business may require as it grows.
Business plans are about the future and the hypothetical challenges and successes that await. It's worth visualizing and documenting the details of your business so that the materials and network around your dream can begin to take shape.
The 'management section' describes your management team, staff, resources, and how your business ownership is structured.
A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows:
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Written by Dave Lavinsky
You’ve come to the right place to create your Accounting business plan.
We have helped over 5,000 entrepreneurs and business owners create business accounting plans and many have used them to start or grow their accounting firms.
Below is a template to help you create each section of your Accounting business plan.
Business overview.
DeSanta & Co is a new accounting firm located in Indianapolis, Indiana. We provide a full suite of accounting services to local businesses, including bookkeeping, accounting, and tax services. Our combined decades of expertise and client-focused service ensures that we will become the #1 accounting firm in the next five years.
DeSanta & Co is run by Michael DeSanta. Michael has decades of accounting experience and has gained a loyal clientbase from providing his services through competing firms. His expertise, reputation, and loyal clientbase will ensure that our firm is successful.
DeSanta & Co will offer its clients a full suite of accounting services. These services include bookkeeping, accounting, tax services, and auditing. The company will employ a large and diverse staff of professional accountants to ensure we can offer as many services as possible.
DeSanta & Co will serve small and medium-sized businesses located in the Indianapolis, Indiana area. Most of these businesses will have less than 1000 employees and earn a revenue less than $10 million per year. We will also offer limited services to individuals, such as tax prep and help.
DeSanta & Co’s most valuable asset is the expertise and experience of its founder, Michael DeSanta. Michael has been a certified public accountant (CPA) for the past 20 years. Throughout his career, he has developed a loyal client base, and many clients have stated that they will switch to DeSanta & Co once the company is established and running. Michael’s combination of skills, accounting knowledge, and loyal following will ensure that DeSanta & Co is a successful firm.
DeSanta & Co will be able to achieve success by offering the following competitive advantages:
DeSanta & Co is currently seeking $400,000 to launch. The funding will be dedicated to the office build out, purchase of initial equipment, working capital, marketing costs, and startup overhead expenses. The breakout of the funding is below:
The following graph below outlines the pro forma financial projections for DeSanta & Co.
Who is desanta & co.
DeSanta & Co is a new accounting firm located in Indianapolis, Indiana that provides local businesses with a full suite of accounting services. We are a small firm but have considerable experience, so we can offer better quality of services than our competition. We expect that our most popular services will include bookkeeping, accounting, and tax services. Our combined decades of expertise and client-focused service ensures that we will become the #1 accounting firm in the next five years.
DeSanta & Co is run by Michael DeSanta. Michael has decades of accounting experience and has gained a loyal clientbase from providing his services through competing firms. After working for several accounting firms around town, he surveyed his clientbase to see if they would be willing to switch to his new company once launched. Most of his clients responded positively, which motivated Michael to finally launch his business.
Upon surveying his clientbase and finding a potential office, Michael DeSanta incorporated DeSanta & Co as an S-Corporation in April 2023.
The business is currently being run out of Michael’s home office, but once the lease on DeSanta & Co’s office location is finalized, all operations will be run from there.
Since incorporation, DeSanta & Co has achieved the following milestones:
DeSanta & Co will provide the following services to its clients:
The accounting industry is essential to the success of other businesses and industries. Accountants record and track financial transactions, which helps businesses ensure they are making a profit. As such, accounting services are always in demand and the industry often sees great growth.
There are several essential services that accounting firms can provide to businesses and individuals. The most popular services include bookkeeping, tax services, advisory services, and valuation and planning. Though most businesses employ their own accountants, many businesses are switching to hiring accounting firms to save on costs.
The accounting industry is expected to grow over the next several years. According to The Business Research Company, the accounting industry is expected to grow at a CAGR of 4.2% from now until 2027. This growth is due to the increasing demand for accountants worldwide. This increase in demand and industry growth ensures that DeSanta & Co will achieve success.
Demographic profile of target market, customer segmentation.
DeSanta & Co will primarily target the following customer profiles:
Direct and indirect competitors.
DeSanta & Co will face competition from other companies with similar business profiles. A description of each competitor company is below.
Perkins & Smith is a small accounting firm that has intentionally remained small so that they can have stronger relationships with their clients. Since they opened in 1960, Perkins & Smith has been one of the leading accounting firms in the Four State Region. They offer a wide range of services including accounting, bookkeeping, payroll services, tax prep and planning, and advisory services. They have built up a loyal clientele and maintained a strong, positive reputation since their opening decades ago.
Premiere Accounting is a large accounting firm that specializes in helping large businesses with accounting, taxes, and similar services. Since opening in 1995, they have acquired a loyal client base, including several multi-billion dollar companies. They employ over a hundred professionals who all have diverse backgrounds. This helps serve their diverse clientele and ensures they are meeting the specific needs of every business that works with them.
Jackson Brothers Accounting is a privately held accountant practice that has been popular in the area since 1985. They offer a wide variety of services including, tax planning and preparation, payroll processing, financial planning, and small business accounting. Though they are open to helping nearly all businesses and sectors, they primarily focus on local small businesses and startups.
DeSanta & Co will be able to offer the following advantages over the competition:
Brand & value proposition.
DeSanta & Co will offer a unique value proposition to its clientele:
The promotions strategy for DeSanta & Co is as follows:
Targeted Cold Calls
DeSanta & Co will initially invest significant time and energy into contacting potential clients via telephone. In order to improve the effectiveness of this phase of the marketing strategy, a highly-focused call list will be used, targeting individuals in areas and occupations that are most likely to need accounting services. As this is a very time-consuming process, it will primarily be used during the startup phase to build an initial client base.
DeSanta & Co understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.
Social Media
DeSanta & Co will invest heavily in a social media advertising campaign. The company will create social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Website/SEO
DeSanta & Co will invest heavily in developing a professional website that displays all of the company’s services. It will also invest heavily in SEO so that the firm’s website will appear at the top of search engine results.
The fees and hourly pricing of DeSanta & Co will be moderate and competitive so clients feel they are receiving great value when utilizing our accounting services.
The following will be the operations plan for DeSanta & Co. Operation Functions:
DeSanta & Co will have the following milestones completed in the next six months.
Though he has never run his own business, Michael DeSanta has worked as an accountant long enough to gain an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry. He also already has a starting client base that he served while working for other accounting firms. He will hire several other employees who can help him run the aspects of the business that he is unfamiliar with.
Key revenue & costs.
DeSanta & Co’s revenues will primarily come from charging clients for the accounting services we provide. We will charge our clients an hourly rate that will vary depending on the services they need.
The notable cost drivers for the company will include labor expenses, overhead, and marketing expenses.
Key assumptions.
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.
Income statement.
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
Revenues | ||||||
Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
Expenses & Costs | ||||||
Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
ASSETS | ||||||
Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
LIABILITIES & EQUITY | ||||||
Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
Share Capital | $0 | $0 | $0 | $0 | $0 | |
Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
CASH FLOW FROM OPERATIONS | ||||||
Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
CASH FLOW FROM INVESTMENTS | ||||||
Investment | ($180,950) | $0 | $0 | $0 | $0 | |
Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
CASH FLOW FROM FINANCING | ||||||
Cash from equity | $0 | $0 | $0 | $0 | $0 | |
Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
What is an accounting business plan.
An accounting business plan is a plan to start and/or grow your accounting business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Accounting business plan using our Accounting Business Plan Template here .
There are a number of different kinds of accounting businesses , some examples include: Full Service Accounting Firm, Bookkeeping Firm, Tax Firm, and Audit Firm.
Accounting businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
Starting an accounting business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop An Accounting Business Plan - The first step in starting a business is to create a detailed accounting business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your accounting business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your accounting business is in compliance with local laws.
3. Register Your Accounting Business - Once you have chosen a legal structure, the next step is to register your accounting business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your accounting business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Accounting Equipment & Supplies - In order to start your accounting business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your accounting business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful accounting business:
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Use this Accounting Firm Business Plan to achieve your goals. Accounting firms are comparable to other industries and need the Business Plan to help their development.
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[Owner.FirstName] [Owner.LastName]
[Owner.Company]
[Owner.Company] is a new accounting firm located in [Owner.City] , [Owner.State] and will serve the surrounding area. The firm will be owned and operated by [Owner.FirstName] [Owner.LastName] , who has (insert number) years of experience in the accounting industry. The firm will offer a range of services, including bookkeeping, tax preparation, financial planning, and consulting to small and medium-sized businesses, as well as individual clients. The firm will also offer online and virtual services for clients who prefer remote assistance.
[Owner.Company] will be registered as a(n) (LLC/Corporation) and will have (insert number) employees at the start, including the owner. The firm will maintain a well-equipped office with a variety of software and tools to ensure that projects can be completed efficiently. [Owner.Company] will differentiate itself from competitors by offering a personalized and comprehensive approach to accounting services, as well as a commitment to customer satisfaction.
The accounting industry is expected to continue to grow as businesses and individuals seek professional help with their financial matters. [Owner.City] is home to several small and medium-sized businesses and a growing population of individuals who may require accounting services. The local market is competitive, with several well-established accounting firms serving the area. However, [Owner.Company] is confident it can differentiate itself through its personalized approach and commitment to customer satisfaction.
[Owner.Company] will use a combination of traditional and digital marketing techniques to reach potential clients. This will include advertising in local newspapers and industry publications, as well as utilizing social media platforms and email marketing to promote services and specials. The firm will also rely on word-of-mouth referrals from satisfied clients. In addition, [Owner.Company] will offer free initial consultations and discounted rates for new clients to attract business and establish relationships.
[Owner.Company] will have a team of skilled accountants who will be responsible for providing accurate and timely services to clients. The firm will have a manager overseeing all projects and ensuring they are completed to the highest standards. The firm will have policies and procedures in place to ensure compliance with industry regulations and standards.
[Owner.Company] will generate revenue through the sale of accounting services to businesses and individuals. The firm will also generate revenue through the sale of financial planning and consulting services. The firm will have operating expenses, including payroll, rent, utilities, and insurance. The firm expects to generate (Amount) i n revenue in the first year, with a projected growth rate of (Percentage) per year. [Owner.Company] will also seek funding through loans or investors in order to cover start-up costs and support growth.
[Owner.Company] is well-positioned to take advantage of the growing demand for accounting services in the [Owner.City] area. With a team of experienced accountants, a focus on personalized and comprehensive services, and a commitment to customer satisfaction, the firm is confident that it will be successful in the competitive accounting market.
[Recipient.FirstName] [Recipient.LastName]
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Choosing an accounting firm for your business isn’t a decision to make lightly.
Selecting the right accounting firm for your business is an important decision that can greatly influence your financial health and business success. A reliable and skilled accounting firm can help you manage taxes, financial planning and bookkeeping, ensuring your business operates smoothly and efficiently.
My organization has extensive experience hiring accounting firms for our own needs and on behalf of our clients, so I understand the critical role a top-notch accounting firm plays in achieving financial stability and growth. This experience has given me valuable insights into what makes an accounting firm truly exceptional.
Here are five key tips to consider when hiring an accounting firm:
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When vetting potential accounting firms, consider the firm’s expertise and specialization. Different firms may focus on areas such as tax planning , auditing, financial consulting or industry-specific services.
Seek a firm with significant experience in your industry. Industry-specific knowledge is invaluable, as the firm will understand the unique challenges and regulatory requirements of your sector. For instance, a construction company would benefit from an accounting firm experienced in managing project-based finances and handling contract revenues.
Additionally, ensure the firm’s accountants are certified and possess relevant professional qualifications. Certified public accountants ( CPAs ) have undergone rigorous training and testing and adhere to high ethical standards, making them adept at handling complex financial issues.
The accounting field is ever-evolving due to changes in tax laws and financial regulations. Firms that prioritize continuing education for their staff are more likely to stay updated with the latest developments, providing accurate and current advice.
Accounting firms’ services vary widely, with some offering comprehensive financial solutions and others specializing in specific areas. If your business requires a broad range of services, choose a firm that provides bookkeeping, tax preparation, auditing, financial planning and advisory services. Larger companies and those experiencing rapid growth typically need comprehensive services due to their complex financial needs and regulatory requirements. In contrast, smaller businesses or startups might benefit more from basic accounting services focused on essential bookkeeping and tax preparation.
It’s important to ask whether the firm can tailor its services to your specific needs. Customization allows the firm to address the financial aspects most relevant to your business. For example, a startup might need strategic financial planning and funding advice , while an established company might focus more on compliance and tax optimization.
Modern accounting firms leverage technology for efficiency and accuracy. Inquire about their use of accounting software and technological tools. Firms employing advanced technology can offer real-time financial reporting, aiding in timely business decisions. Examples of effective accounting software include QuickBooks, Xero, Sage Intacct and FreshBooks and cloud-based platforms such as NetSuite, which facilitate seamless integration and automation.
The reputation of an accounting firm offers insights into its reliability and service quality. Look for reviews and testimonials from the firm’s current or past clients. Positive feedback from similar businesses can indicate whether the firm can meet your needs. Online reviews on platforms such as Google, Yelp and industry-specific forums can provide valuable insights.
A reputable firm should also willingly provide references upon request. Speaking with past or current clients can give you a clearer picture of what to expect in terms of service quality, responsiveness and expertise.
Membership in professional associations such as the American Institute of Certified Public Accountants or the local Chamber of Commerce is also something to consider, as that can indicate a firm’s commitment to maintaining high standards and staying engaged with industry best practices.
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Effective communication and responsiveness are crucial for a productive relationship with your accounting firm. How accessible are the firm’s accountants? Will you have a dedicated point of contact? How quickly do they respond to emails or phone calls? Accessibility ensures you get timely answers to your questions and that any issues are addressed promptly.
You’ll want to make sure the firm you work with has a similar communication style to you, as well. The firm should communicate complex financial information clearly and understandably.
A good accounting firm goes beyond reacting to your needs by providing proactive advice. They should keep you informed about changes in tax laws, identify opportunities for financial improvement and offer strategic guidance to help you achieve your business goals. For example, an accounting firm once advised my company to optimize our cash flow by restructuring our debt and taking advantage of certain tax incentives . This strategic advice not only improved our financial health but also enabled us to reinvest in our business, leading to significant growth and expansion.
Understanding a firm’s pricing structure and evaluating the value it provides help to ensure its services fit within your budget and deliver a good return on investment.
Make sure the firm provides a clear, transparent pricing structure. Be wary of firms that are vague about their fees. Understanding how the firm charges — whether it’s an hourly rate, a fixed fee or a retainer — can help you budget accordingly.
It’s also important to consider the value the firm provides for its fees. A higher fee might be justified if the firm offers extensive expertise or specialized services.
Conduct a cost-benefit analysis to determine if the services offered justify the expense. For example, a firm that helps you significantly reduce your tax liability or streamline your financial processes might offer substantial savings that outweigh its fees.
Choosing an accounting firm isn’t a decision to make lightly. By first assessing these factors, you can make an informed choice that aligns with your business’ needs and goals. A good accounting firm can be a valuable partner in your company’s financial success, providing the support and expertise you need to set your business up for financial success .
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, is gross margin," Berry says. "Gross margin, less expenses, interest ...
Generally, the financial section is one of the last sections in a business plan. It describes a business's historical financial state (if applicable) and future financial projections. Businesses include supporting documents such as budgets and financial statements, as well as funding requests in this section of the plan. The financial part of ...
The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of four financial statements: the income statement, the cash flow projection, the balance sheet, and the statement of shareholders ...
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
Business plan financials is the section of your business plan that outlines your past, current and projected financial state. This section includes all the numbers and hard data you'll need to plan for your business's future, and to make your case to potential investors. You will need to include supporting financial documents and any ...
7. Build a Visual Report. If you've closely followed the steps leading to this, you know how to research for financial projections, create a financial plan, and test assumptions using "what-if" scenarios. Now, we'll prepare visual reports to present your numbers in a visually appealing and easily digestible format.
Here is a basic template that any business can use when developing its business plan: Section 1: Executive Summary. Present the company's mission. Describe the company's product and/or service offerings. Give a summary of the target market and its demographics.
Sales Forecast. Unit prices represent the average project cost for tax services ($750), cost accounting projects ($1,000), and QuickBooks services ($300). Bookkeeping services are set at $30 per hour. Direct unit costs are very low for all of these services as they are primarily labor services.
A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business. Business plans can help you get funding or bring on new business partners.
1. Create Your Executive Summary. The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans. Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
A good business plan is an entrepreneur's best friend. It's an indispensable document, and every section matters, from the executive summary to the market analysis to the appendix; however, no ...
The Financial Statement. First, a financial plan should include a financial statement that consists of the following three parts. Income statement: Also called the profit and loss statement, or P&L, it details the profit or loss the business will generate. Cash flow statement: Functioning a little like a check register for a checking account ...
Learn about the best business plan software. 1. Write an executive summary. This is your elevator pitch. It should include a mission statement, a brief description of the products or services your ...
Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a accounting business plan, your marketing strategy should include the following: Product: In the product section, you should reiterate the type of accounting company that you documented in your company overview.
A business plan financial section is about making simple forecasts and creating a few financial reports. You don't need to know accounting, nor is it necessary for creating financial projections. We have outlined and simplified the process of creating a financial plan for business plan. Simply follow the process and take help from our ...
Appendix. Learn more about how to write a business plan step-by-step by checking out the sections below. 1. Executive summary. Your executive summary should concisely explain the key points of your business. Keep your summary short and sweet. It should outline the rest of your business plan, not repeat it.
The financial and accounting business plan section may include a detailed list of items needed to start the business. Equipment, vehicles, facilities, inventory, employees and similar startup ...
The financial analysis section should be based on estimates for new businesses or recent data for established businesses. It should include these elements: Balance sheet: Your assumed and anticipated business financials, including assets, liabilities, and equity. Cash-flow analysis: An overview of the cash you anticipate will be coming into ...
Once you've got your audience in mind, you can start your business plan, which should include: 1. Executive summary. Even though it appears first in the official plan, write this section last so you can condense essential ideas from the other nine sections. For now, leave it as a placeholder.
Each section of a traditional business plan provides a detailed overview of your business's structure, leadership, strategy, products and services, and financial projections. Traditional ...
3. Products & Services. This section allows for a more complete explanation of the kinds of goods or services the business will be selling or providing. Make the descriptions compelling and ...
A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows: The market analysis outlines the demand for your product or service. The competitive analysis section shows your competition's strengths and weaknesses and your strategy for gaining market share.
Below is a template to help you create each section of your Accounting business plan. Executive Summary Business Overview. DeSanta & Co is a new accounting firm located in Indianapolis, Indiana. We provide a full suite of accounting services to local businesses, including bookkeeping, accounting, and tax services. Our combined decades of ...
FINANCIAL PLAN. This section should include financial projections, a cash flow statement, a profit and loss statement, a balance sheet, a break-even analysis, and a funding plan (if applicable). [Owner.Company] will generate revenue through the sale of accounting services to businesses and individuals. The firm will also generate revenue ...
If your business requires a broad range of services, choose a firm that provides bookkeeping, tax preparation, auditing, financial planning and advisory services. Larger companies and those ...
Entities with business in the affected areas might need to adjust their operations, and some might plan longer-term changes. Menu. Normes Comptables - IFRS ... Recherche dans une section. Sélectionnez une section ci-après et tapez votre recherche. ... Your go-to resource for timely and relevant accounting, auditing, reporting and business ...