Your Road Map to Success Jennifer H. Elder, CPA, CMA Copyright October 2008
<ul><li>If you don’t know where you are going,  </li></ul><ul><li>you may end somewhere else  </li></ul><ul><li>–  Casey S...
NO PLAN
PLAN WITHOUT FEEDBACK
PLAN WITH FEEDBACK <ul><li>1. Starting in  ORLANDO,   FL  on  S   MAGNOLIA   AVE  go toward  E   SOUTH   ST  go  264  ft <...
<ul><li>BUSINESS PLAN </li></ul><ul><li>FINANCIAL PLAN </li></ul><ul><li>formal, extensive </li></ul><ul><li>7-8 sections,...
WHY HAVE A PLAN? <ul><li>External requirements – banks, investors, partners </li></ul><ul><li>Planning process develops co...
STARTING A FINANCIAL PLAN <ul><li>Where are you now? </li></ul><ul><li>Where do you want to go? </li></ul><ul><li>How will...
SET TARGETS <ul><li>Sales revenue ($ and #) </li></ul><ul><li>Product costs and margins </li></ul><ul><li>Controllable exp...
EVERY TARGET MUST BE  SMART <ul><li>S  – SPECIFIC - what, where, why, how </li></ul><ul><li>M  – MEASURABLE – be able to a...
EVALUATE & ADJUST <ul><li>track progress  </li></ul><ul><li>monthly, quarterly, annually </li></ul><ul><li>compare to targ...
TYPES OF TARGETS <ul><li>CUSTOMER SERVICE </li></ul><ul><li>SALES </li></ul><ul><li># calls per rep per day </li></ul><ul>...
TYPES OF TARGETS <ul><li>ROUTE SALES </li></ul><ul><li>FINANCE/HR </li></ul><ul><li>Sales $ per route </li></ul><ul><li>Ga...
TYPES OF TARGETS <ul><li>PRODUCTION </li></ul><ul><li>OPERATIONS </li></ul><ul><li>gallons produced per week </li></ul><ul...
SUCCESS FACTORS <ul><li>leadership </li></ul><ul><li>consensus </li></ul><ul><li>communicate to everyone </li></ul><ul><li...
RESOURCES <ul><li>sba.gov </li></ul><ul><li>entrepreneur.com/businessplan </li></ul><ul><li>balanced scorecard.org </li></...
looking back to measure your progress
FINANCIAL STATEMENTS <ul><li>Four Statements – </li></ul><ul><ul><li>Income Statement </li></ul></ul><ul><ul><li>Balance S...
INCOME STATEMENT <ul><li>Sales </li></ul><ul><li>(Cost of Goods Sold) </li></ul><ul><li>Gross Profit </li></ul><ul><li>(Ex...
READING THE STORY <ul><li>look at numbers in  CONTEXT </li></ul><ul><li>compare periods and years </li></ul><ul><li>look f...
UNICORN BOTTLED WATER <ul><li>June 2008 Gross Sales = $730,396 </li></ul><ul><li>June 2007 Gross Sales = $693,896 </li></u...
UNICORN BOTTLED WATER Gross Sales
YEAR-TO-YEAR
GROSS PROFIT
GROSS PROFIT
EXPENSES <ul><li>CONTEXT </li></ul><ul><ul><li>Single number </li></ul></ul><ul><ul><li>Percentage  </li></ul></ul><ul><ul...
EXPENSES
COMMON SIZE
SUMMARY <ul><li>Financial Plan is your road map to success! </li></ul><ul><li>Success depends on implementation! </li></ul...
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Financial Planning For Business

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How to prepare a financial plan for your business

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Financial Planning For Business

  1. 1. Your Road Map to Success Jennifer H. Elder, CPA, CMA Copyright October 2008
  2. 2. <ul><li>If you don’t know where you are going, </li></ul><ul><li>you may end somewhere else </li></ul><ul><li>– Casey Stengel </li></ul><ul><li>Even if you know where you are going </li></ul><ul><li>you probably won’t get there </li></ul><ul><li>– Tom Peters </li></ul><ul><li>If you fail to plan then you are </li></ul><ul><ul><li>planning to fail </li></ul></ul><ul><li>– Alan Lakein </li></ul>
  3. 3. NO PLAN
  4. 4. PLAN WITHOUT FEEDBACK
  5. 5. PLAN WITH FEEDBACK <ul><li>1. Starting in ORLANDO, FL on S MAGNOLIA AVE go toward E SOUTH ST go 264 ft </li></ul><ul><li>2.Turn LEFT on E SOUTH ST(SR-15 N) go 0.24 mi </li></ul><ul><li>3.Take ramp onto I-4 E toward DAYTONA BEACH go 49.08 mi </li></ul><ul><li>4.Take the JACKSONVILLE LEFT exit onto I-95 N go 786.65 mi </li></ul><ul><li>5.Continue on I-395 N toward WASHINGTON go 11.68 mi </li></ul><ul><li>  </li></ul><ul><li>6.Bear LEFT on I-295 S go 1.2 mi </li></ul><ul><li>  </li></ul><ul><li>7.Take LEFT fork onto SOUTHEAST FWY toward PENNSYLVANIA AVENUE go 0.79 mi </li></ul><ul><li>  </li></ul><ul><li>8.Take the PENNSYLVANIA AVENUE exit onto PENNSYLVANIA AVE SE go 0.65 mi </li></ul><ul><li>9.Bear LEFT on FAIRLAWN AVE SE go 106 ft </li></ul><ul><li>  </li></ul><ul><li>10.Take ramp onto DC-295 N go 3.41 mi </li></ul><ul><li>  </li></ul><ul><li>11.Continue on MD-295 N go 0.32 mi </li></ul><ul><li>  </li></ul><ul><li>12.Take the ANNAPOLIS/RICHMOND exit onto US-50 E go 23.89 mi </li></ul><ul><li>  </li></ul><ul><li>13.Take exit #24/ROWE BLVD/BESTGATE RD/ANNAPOLIS onto ROWE BLVD(MD-70 E) toward ANNAPOLIS/ROWE BLVD SOUTH go 1.78 mi </li></ul><ul><li>  </li></ul><ul><li>14.Continue on NORTHWEST ST go 0.12 mi </li></ul><ul><li>  </li></ul><ul><li>15.At CHURCH CIR, take fourth exit onto DUKE OF GLOUCESTER ST go 0.24 mi </li></ul><ul><li>16.Arrive at the center of ANNAPOLIS, MD </li></ul><ul><li>  </li></ul><ul><li>Time: 13 hours 32 mins, Distance: 880.12 miles </li></ul>
  6. 6. <ul><li>BUSINESS PLAN </li></ul><ul><li>FINANCIAL PLAN </li></ul><ul><li>formal, extensive </li></ul><ul><li>7-8 sections, 20-30 pages </li></ul><ul><li>long-range, 3-5 years </li></ul><ul><li>wide – SWOT, market </li></ul><ul><li>general strategies </li></ul><ul><li>overall business goals </li></ul><ul><li>communication tool </li></ul><ul><li>decision-making tool externally (bankers, investors) </li></ul><ul><li>KISS </li></ul><ul><li>2-3 sections, 5-10 pages </li></ul><ul><li>short-term, 1 year </li></ul><ul><li>narrow – current to near term </li></ul><ul><li>detailed tactics </li></ul><ul><li>departmental targets </li></ul><ul><li>communication tool </li></ul><ul><li>decision-making tool internally </li></ul>
  7. 7. WHY HAVE A PLAN? <ul><li>External requirements – banks, investors, partners </li></ul><ul><li>Planning process develops consensus on direction/destination </li></ul><ul><li>Creates specific steps to achieve targets </li></ul><ul><li>Useful guide when you encounter challenges </li></ul><ul><li>Provides a yardstick to measure progress </li></ul>
  8. 8. STARTING A FINANCIAL PLAN <ul><li>Where are you now? </li></ul><ul><li>Where do you want to go? </li></ul><ul><li>How will you get there? </li></ul><ul><li>How will you know when you arrive? </li></ul>
  9. 9. SET TARGETS <ul><li>Sales revenue ($ and #) </li></ul><ul><li>Product costs and margins </li></ul><ul><li>Controllable expenses </li></ul><ul><li>Accounts Receivable/Accounts Payable </li></ul><ul><li>Financing </li></ul><ul><li>Customer satisfaction </li></ul><ul><li>Employee training/coaching </li></ul><ul><li>Employee satisfaction </li></ul><ul><li>Vendor relationships </li></ul>
  10. 10. EVERY TARGET MUST BE SMART <ul><li>S – SPECIFIC - what, where, why, how </li></ul><ul><li>M – MEASURABLE – be able to assess progress </li></ul><ul><li>A – ATTAINABLE – within reach </li></ul><ul><li>R – RELEVANT – apply to overall business goals </li></ul><ul><li>T – TIME sensitive – set a deadline </li></ul>
  11. 11. EVALUATE & ADJUST <ul><li>track progress </li></ul><ul><li>monthly, quarterly, annually </li></ul><ul><li>compare to targets </li></ul><ul><li>adjust plan continually </li></ul><ul><li>reward performance!!! </li></ul>
  12. 12. TYPES OF TARGETS <ul><li>CUSTOMER SERVICE </li></ul><ul><li>SALES </li></ul><ul><li># calls per rep per day </li></ul><ul><li>average call length </li></ul><ul><li># missed calls </li></ul><ul><li>customer satisfaction survey scores </li></ul><ul><li># sales calls per week </li></ul><ul><li>close ratio </li></ul><ul><li>increase in units sold </li></ul><ul><li>increase in particular customer type </li></ul>
  13. 13. TYPES OF TARGETS <ul><li>ROUTE SALES </li></ul><ul><li>FINANCE/HR </li></ul><ul><li>Sales $ per route </li></ul><ul><li>Gallons delivered per route </li></ul><ul><li># missed stops </li></ul><ul><li>customer satisfaction survey scores </li></ul><ul><li>complete month-end close within 7 days </li></ul><ul><li># HR issues addressed </li></ul><ul><li>negotiated contract savings </li></ul><ul><li># employee training seminars </li></ul>
  14. 14. TYPES OF TARGETS <ul><li>PRODUCTION </li></ul><ul><li>OPERATIONS </li></ul><ul><li>gallons produced per week </li></ul><ul><li>gallons per manhour </li></ul><ul><li># out-of-stocks </li></ul><ul><li># water complaints </li></ul><ul><li>Sales revenue per employee </li></ul><ul><li>Charitable contributions </li></ul><ul><li>employee satisfaction survey scores </li></ul><ul><li># accident free days </li></ul>
  15. 15. SUCCESS FACTORS <ul><li>leadership </li></ul><ul><li>consensus </li></ul><ul><li>communicate to everyone </li></ul><ul><li>application </li></ul><ul><li>feedback </li></ul>
  16. 16. RESOURCES <ul><li>sba.gov </li></ul><ul><li>entrepreneur.com/businessplan </li></ul><ul><li>balanced scorecard.org </li></ul><ul><li>wikihow.com/Write-a-Business-Plan </li></ul>
  17. 17. looking back to measure your progress
  18. 18. FINANCIAL STATEMENTS <ul><li>Four Statements – </li></ul><ul><ul><li>Income Statement </li></ul></ul><ul><ul><li>Balance Sheet </li></ul></ul><ul><ul><li>Statement of Cash Flows </li></ul></ul><ul><ul><li>Statement of Owner’s Equity </li></ul></ul>
  19. 19. INCOME STATEMENT <ul><li>Sales </li></ul><ul><li>(Cost of Goods Sold) </li></ul><ul><li>Gross Profit </li></ul><ul><li>(Expenses) </li></ul><ul><li>Operating Income </li></ul><ul><li>+/- Other </li></ul><ul><li>Net Income </li></ul>
  20. 20. READING THE STORY <ul><li>look at numbers in CONTEXT </li></ul><ul><li>compare periods and years </li></ul><ul><li>look for TRENDS </li></ul><ul><li>compare to your financial plan </li></ul><ul><li>compare to industry standards </li></ul><ul><ul><li>IBWA Benchmark Study </li></ul></ul>
  21. 21. UNICORN BOTTLED WATER <ul><li>June 2008 Gross Sales = $730,396 </li></ul><ul><li>June 2007 Gross Sales = $693,896 </li></ul><ul><li>INCREASE of 5.2% </li></ul><ul><li>May 2008 Gross Sales = $745,734 </li></ul><ul><li>DECREASE of 2.1% </li></ul>
  22. 22. UNICORN BOTTLED WATER Gross Sales
  23. 23. YEAR-TO-YEAR
  24. 24. GROSS PROFIT
  25. 25. GROSS PROFIT
  26. 26. EXPENSES <ul><li>CONTEXT </li></ul><ul><ul><li>Single number </li></ul></ul><ul><ul><li>Percentage </li></ul></ul><ul><ul><ul><li>Common Size Statements - % of Sales </li></ul></ul></ul><ul><ul><li>Compare to budgets </li></ul></ul><ul><li>TRENDS </li></ul>
  27. 27. EXPENSES
  28. 28. COMMON SIZE
  29. 29. SUMMARY <ul><li>Financial Plan is your road map to success! </li></ul><ul><li>Success depends on implementation! </li></ul><ul><li>Feedback and adjustments are key! </li></ul><ul><li>“ Good plans shape good decisions. That's why good planning helps to make elusive dreams come true.” </li></ul>

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