This is the final part of the business plan series! Links to previous articles below!
Business Plan Budget
“Is there anyone here who, planning to build a new house, doesn’t first sit down and figure the cost so you’ll know if you can complete it? If you only get the foundation laid and then run out of money, you’re going to look pretty foolish.” ~ Luke 14:28
A business plan isn’t complete unless you have a solid understanding of how much it’s going to cost to run the business. All too often I see entrepreneurs set out to build a business on a great idea, with no clue if they can pull it off financially. This usually leads to a great deal of stress, loss of money, strain on relationships, etc.
While I’m usually the first person to celebrate with you about your great idea (High I and D personality style), I’m also going to be the first to push you to process through every possible income and expense of your new venture. Desperate doesn’t sell!
Here are some things to think about adding to your business plan budget:
- Products, production costs and unit costs
- Salaries, commissions, subcontractor fees
- Advertising, marketing, sales expenses
- Legal and professional fees for getting the business started
- Office supplies to get up and running
- Rent and utilities of any needed business space
- Travel expenses
These are just some of the things that people don’t think to budget when starting a business or project. For a more detailed process, check out my podcast and blog on budgeting called Budget Correctly or Fail! It’ll give you a really good idea of HOW to budget correctly for your business.
The final step of the business plan is to create an Action Plan. Once we have all of the previous details (see additional posts mentioned above) and a budget, we need to know what it looks like to deliver the product or provide the service. In other words, when we’ve completed all of the previous steps:
- What will the first 90 – 180 days of business look like?
- How are we accomplishing the goals we set?
- What are the KRA’s of those involved?
- What are the performance indicators?
- What do we change if we’re not hitting our performance indicators?
Having an action plan that answers these questions proves the business has thought through each element and is ready to rock.
I also like to have a section at the end of each business plan to keep track of what we learned while implementing the plan. Considering answering follow-up questions like this after the first 90 days:
- What surprised us?
- What were we not prepared for?
- What didn’t work?
- What did we not think through?
- Where did we under or over-budget income, expenses, time, etc.?
- What else have we learned?
This will not only help adjust the plan as we go, but it’s a phenomenal way to see how we process information and ask questions. Did we do a good job thinking through everything?
Lastly, what does phase two of this process look like, if there is one, which I highly recommend? What does the rollout of a second product or service look like (knowing it won’t launch for quite a while).
Processing through all of this information will help you to make key decisions about going forward with your business or project.
We’ve been in a series on business plans and have covered: