Working on a Business Plan

by Diane M. Hoffmann
http://businessplan101.blogspot.ca/

When you start working on a business plan, you need to think of all the expenses that may be expected. Even if you will start in your home to operate the business, add the expense of renting as well.

Because this will get you to begin to generate the sales you will need to cover all of those expenses.

A lot of people also do not see and understand how even their own salary must be provided for in the vision of a business plan. They just think of the "self-employment" and the "sales" they'll be "automatically" getting, and assume they'll be able to live on what's left in the bottom line.

The most important aspect of any business is "sales". If you are not prepared to sell, you shouldn't get into business. Sales is everything. Without sales there is no business. So you should start immediately making your sales activity a priority.

And it doesn't matter what kind of business it is -- whether it is ONline or OFFline -- this works for any type of small business start-up. It works on basic figures that you can expect a business to make no matter what product or service it provides.

How much money do you need to live? You need to pay for your shelter, food and necessary expenses. If you're single, you may get by with $25-30,000 to start. If you're supporting a family you'll need more!

Whatever it is that you need, include it in your operating expenses. Include everything that will cost to operate your business. Then work it backwards to the first line of your operating budget -- sales.

In other words, if you calculate that your operating expenses will total $200,000 including everything, then you will need at least that in your revenue (sales) figure. This means you will have to sell for that much to make your business work.

Of course there is also the direct cost of sales that you have to figure out and allowance for your tax and other financial obligations before the final net profit line. We'll talk about that in a future post.

/dmh

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