Email this Article Print This Article Developing a marketing plan is nothing more than setting goals and making a to-do list that will get you there. The process of planning something is time-consuming and exhaustive, but it is an absolute necessity if you want to be successful.
Here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement. Based in the Washington, D. Getty Images A business plan is all conceptual until you start filling in the numbers and terms. The sections about your marketing plan and strategy are interesting to read, but they don't mean a thing if you can't justify your business with good figures on the bottom line.
You do this in a distinct section of your business plan for financial forecasts and statements. The financial section of a business plan is one of the most essential components of the plan, as you will need it if you have any hope of winning over investors or obtaining a bank loan.
Even if you don't need financing, you should compile a financial forecast in order to simply be successful in steering your business. The Purpose of the Financial Section Let's start by explaining what the financial section of a business plan is not.
Realize that the financial section is not the same as accounting. Many people get confused about this because the financial projections that you include--profit and loss, balance sheet, and cash flow--look similar to accounting statements your business generates.
But accounting looks back in time, starting today and taking a historical view. Business planning or forecasting is a forward-looking view, starting today and going into the future. It's an elaborate educated guess. And you don't spend a lot of time on minute details in a financial forecast that depends on an educated guess for sales.
You're going to need it if you are seeking investment from venture capitalists, angel investors, or even smart family members. They are going to want to see numbers that say your business will grow--and quickly--and that there is an exit strategy for them on the horizon, during which they can make a profit.
Any bank or lender will also ask to see these numbers as well to make sure you can repay your loan. It should be a guide to running your business," Pinson says. One way, Berry says, is to break the figures into components, by sales channel or target market segment, and provide realistic estimates for sales and revenue.
But if you break the guess into component guesses and look at each one individually, it somehow feels better," Berry says. The Components of a Financial Section A financial forecast isn't necessarily compiled in sequence.
And you most likely won't present it in the final document in the same sequence you compile the figures and documents.
Berry says that it's typical to start in one place and jump back and forth. For example, what you see in the cash-flow plan might mean going back to change estimates for sales and expenses. Still, he says that it's easier to explain in sequence, as long as you understand that you don't start at step one and go to step six without looking back--a lot--in between.
Start with a sales forecast. Set up a spreadsheet projecting your sales over the course of three years. Set up different sections for different lines of sales and columns for every month for the first year and either on a monthly or quarterly basis for the second and third years.
Because you want to calculate gross margin. Gross margin is sales less cost of sales, and it's a useful number for comparing with different standard industry ratios. The best way to do that, Berry says, is to look at past results.
Create an expenses budget.
You're going to need to understand how much it's going to cost you to actually make the sales you have forecast. Berry likes to differentiate between fixed costs i. Berry recommends you go with simple math. He says multiply estimated profits times your best-guess tax percentage rate to estimate taxes.
And then multiply your estimated debts balance times an estimated interest rate to estimate interest. Develop a cash-flow statement.
This is the statement that shows physical dollars moving in and out of the business.
You base this partly on your sales forecasts, balance sheet items, and other assumptions. If you are operating an existing business, you should have historical documents, such as profit and loss statements and balance sheets from years past to base these forecasts on.
If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months. Pinson says that it's important to understand when compiling this cash-flow projection that you need to choose a realistic ratio for how many of your invoices will be paid in cash, 30 days, 60 days, 90 days and so on.
You don't want to be surprised that you only collect 80 percent of your invoices in the first 30 days when you are counting on percent to pay your expenses, she says.
Some business planning software programs will have these formulas built in to help you make these projections.Internet Marketing Retirement Plan Step #1: Creating, acquiring, or licensing products to sell.
To make a million dollars a year on the Internet requires about 15 different things you have to do -- most of them complex and labor-intensive. Join my office hours GoogleHangouts and get personal help from me, the instructor if you have specific questions.
And become a part of my student community Innovative approach: Start with a 2-sentence marketing plan, expand it to a 1-page marketing plan and then to a full and professional plan. Not only it is far less overwhelming to create a one-page marketing plan than it is to write a full-blown, page plan, but it’s easier to follow, too.
Keep it simple, silly! Reply. (Note that if you are developing a marketing plan on its own, rather than as part of a business plan, the plan will also need to include a Target Market and a Competitors' Analysis torosgazete.com can learn how to do these sections in How to Write the Market Analysis Section of the Business Plan and How to Write the Competitors' Analysis Section.).
If you haven’t put your ideas, questions and concerns on paper, then you haven’t given your business model enough thought.. Taking the time to write a business plan might seem like a lot of work but it can save you a lot of time and money in the long-run by better preparing you for potential challenges and opportunities that you’ll face as a first time entrepreneur.
Now that you understand why you need a business plan and you've spent some time doing your homework gathering the information you need to create one, it's time to roll up your sleeves and get.