Business
Plan - Part 3
The Management Plan
Managing a business requires more than just
the desire to be your own boss. It demands dedication, persistence,
the ability to make decisions and the ability to manage both employees
and finances. Your management plan, along with your marketing
and financial management plans, sets the foundation for and facilitates
the success of your business.
Like plants and equipment, people are resources-they
are the most valuable asset a business has. You will soon discover
that employees and staff will play an important role in the total
operation of your business. Consequently, it's imperative that
you know what skills you possess and those you lack since you
will have to hire personnel to supply the skills that you lack.
Additionally, it is imperative that you know how to manage and
treat your employees. Make them a part of the team. Keep them
informed of, and get their feedback regarding, changes. Employees
oftentimes have excellent ideas that can lead to new market areas,
innovations to existing products or services or new product lines
or services which can improve your overall competitiveness.
Your management plan should answer questions
such as:
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How does your background/business experience
help you in this business?
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What are your weaknesses and how can you
compensate for them?
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Who will be on the management team?
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What are their strengths/weaknesses?
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What are their duties?
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Are these duties clearly defined?
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If a franchise, what type of assistance
can you expect from the franchisor?
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Will this assistance be ongoing?
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What are your current personnel needs?
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What are your plans for hiring and training
personnel?
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What salaries, benefits, vacations, holidays
will you offer? If a franchise, are these issues covered in the
management package the franchisor will provide?
|
What benefits, if any, can you afford at
this point?
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If a franchise, the operating procedures, manuals
and materials devised by the franchisor should be included in
this section of the business plan. Study these documents carefully
when writing your business plan, and be sure to incorporate this
material. The franchisor should assist you with managing your
franchise. Take advantage of their expertise and develop a management
plan that will ensure the success for your franchise and satisfy
the needs and expectations of employees, as well as the franchisor.
The Financial Management
Plan
Sound financial management is one of the best
ways for your business to remain profitable and solvent. How well
you manage the finances of your business is the cornerstone of
every successful business venture. Each year thousands of potentially
successful businesses fail because of poor financial management.
As a business owner, you will need to identify and implement
policies that will lead to and ensure that you will meet your
financial obligations.
To effectively manage your finances, plan a
sound, realistic budget by determining the actual amount of money
needed to open your business (start-up costs) and the amount needed
to keep it open (operating costs). The first step to building
a sound financial plan is to devise a start-up budget. Your start-up
budget will usually include such one-time-only costs as major
equipment, utility deposits, down payments, etc.
The start-up budget should allow for these
expenses.
Start-up Budget
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personnel (costs prior to opening)
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legal/professional fees
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occupancy
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licenses/permits
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equipment
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insurance
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supplies
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advertising/promotions
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salaries/wages
|
accounting
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income
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utilities
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payroll expenses
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An operating budget is prepared when you are
actually ready to open for business. The operating budget will
reflect your priorities in terms of how your spend your money,
the expenses you will incur and how you will meet those expenses
(income). Your operating budget also should include money to
cover the first three to six months of operation. It should allow
for the following expenses.
Operating Budget
|
personnel
|
insurance
|
rent
|
depreciation
|
loan payments
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advertising/promotions
|
legal/accounting
|
miscellaneous expenses
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supplies
|
payroll expenses
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salaries/wages
|
utilities
|
dues/subscriptions/fees
|
taxes
|
repairs/maintenance
| | | | | | | | | | | | | | |
The financial section of your business plan
should include any loan applications you've filed, a capital equipment
and supply list, balance sheet, breakeven analysis, pro-forma
income projections (profit and loss statement) and pro-forma cash
flow. The income statement and cash flow projections should include
a three-year summary, detail by month for the first year, and
detail by quarter for the second and third years.
The accounting system and the inventory control
system that you will be using is generally addressed in this section
of the business plan also. If a franchise, the franchisor may
stipulate in the franchise contract the type of accounting and
inventory systems you may use. If this is the case, he or she
should have a system already intact and you will be required to
adopt this system. Whether you develop the accounting and inventory
systems yourself, have an outside financial advisor develop the
systems or the franchisor provides these systems, you will need
to acquire a thorough understanding of each segment and how it
operates. Your financial advisor can assist you in developing
this section of your business plan.
The following questions should help you determine
the amount of start-up capital you will need to purchase and open
a franchise.
|
How much money do you have?
|
How much money will you need to purchase
the franchise?
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How much money will you need for start-up?
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How much money will you need to stay in
business?
| | | |
Other questions that you will need to consider
are:
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What type of accounting system will your
use? Is it a single entry or dual entry system?
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What will your sales goals and profit goals
for the coming year be? If a franchise, will the franchisor set
your sales and profit goals? Or, will he or she expect you to
reach and retain a certain sales level and profit margin?
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What financial projections will you need to include in your business plan?
|
What kind of inventory control system will
you use?
| | | |
Your plan should include an explanation of
all projections. Unless you are thoroughly familiar with financial
statements, get help in preparing your cash flow and income statements
and your balance sheet. Your aim is not to become a financial
wizard, but to understand the financial tools well enough to gain
their benefits. Your accountant or financial advisor can help
you accomplish this goal.
Sample balance sheets, income projections (profit
and loss statements) and cash flow statements are included in
Appendix 2, Financial Management.
Next Topic: DIY- Appendix
I
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