Too often, business owners who get into trouble don’t even know they’re insolvent until the landlord puts a lock on the door.
A business plan sets the owner up with a basic understanding of business financials, and helps avoid the carnage. All business plans should include a cash flow forecast, pro forma income statements and balance sheets. In addition to these three critical components, there are a number of other financial reports that can help entrepreneurs understand how their business works.
Here are nine financial reports and a brief explanation of each.
- 1. Sales Forecast. A first year, 12-month projection of the number of units and the values for each product or service you will sell. A good sales forecast shows slower times, busier times and growth or shrinkage – it is the basic building block that enables owners to determine whether or not the business will bring in enough money to meet their financial expectations.
Continue reading Financial Reports That Help You Understand Your Business
Once an entrepreneur makes a success of one business, there’s a dangerous tendency to think he can duplicate his efforts in another business, and then another, and another. Spreading yourself and your resources over a number of ventures can impair your ability to deal with financial and other challenges. Aside from stretching finances, getting pulled in too many directions can deplete a business owner’s time and energy, making it difficult to maintain the core business that brought about the initial success.
The key to avoiding this killer is to know your abilities and be sure to keep enough energy, cash and focus to maintain your core business. When you’re tempted to spread your wings and become a raving capitalist, the first question to ask yourself is how much time, energy and money you can afford to invest.
- Assess Your Current Situation. The time to consider branching out to own different ventures is after you’ve made your core business successful and honed your time management to the point that you have time to invest in other things. A starting point to investing is to take a close look at where you’re at with regard to the core business. Is it running smoothly? Where is it at in the growth cycle? How much of your time is needed currently to run the business? Will it require more of your time and energy in the future?
Continue reading Beyond the First Small Business
After coaching many people through the eye of the business planning needle, I’m intrigued and bewildered by the gap between “what business planning is” and “what people seem to think it is.” Time and again I see intelligent people going to great lengths to avoid business planning when it’s exactly what they need to navigate the complexities of start-up.
Whether they admit it or not, those who succeed in business do some sort of planning – or hire someone to do it for them. The pieces of a successful business don’t fall into place perfectly by themselves without some kind of high-level roadmap to get them flying in formation. The elements of success come together because someone—usually the business owner—plans, agonizes, organizes, pampers, and weaves the threads together to achieve the desired positive result.
So, what is this aggravation called business planning? Continue reading To Business Plan or Not: Is That Really the Question?
Entrepreneurship has always been a key driver for job creation in our marketplace, and small businesses will continue to generate the lion’s share of new jobs in the future.
When it comes to job creation, there’s no playground quite as exciting or readily available for new entrants than the world of self-employment. While stepping into business is not for the weak or weary, it holds great promise for anyone with skills to market and a modicum of get-up-and-go.
Here are a few questions to ask yourself as you consider joining the ranks of the self-employed. Continue reading A Self Employment Checklist