Is Your Plan Workable?

Stop when you have worked out your break-even point. Whether the break-even point looks realistic or way off base, it is time to make sure that your plan is workable.

Take time to re-examine your plan before you back it with money. If the plan is not workable, better to learn it now than to realize six months down the road that you are pouring money into a losing venture.

In reviewing your plan, look at the cost figures you drew up when you broke down your expenses for the year (operating ratios on the income statement). If any of your cost items are too high or too low, change them. You can write your changes above or below your original entries on the worksheet. When you finish making your adjustments, you will have a revised projected statement of sales and expenses.

With your revised figures, work out a revised break-even analysis. Whether the new break-even point looks good or bad, take one more precaution. Show your plan to someone who has not been involved in working out the details with you. Get an impartial. knowledgeable second opinion. Your banker, or other advisor may see weaknesses that failed to appear as you went over the plan details. These experts may see strong points that your plan should emphasize.

Put Your Plan Into Action

When your plan is as thorough and accurate as possible you are ready to put it into action. Keep in mind that action is the difference between a plan and a dream. If a plan is not acted upon, it is of no more value than a wishful dream. A successful owner-manager does not stop after gathering information and drawing up a business plan, as you have done in working through this Guide. use the plan.

At this point, look back over your plan. Look for things that must be done to put your plan into action. What needs to be done will depend on your situation and goals. For example, if your business plan calls for an increase in sales, you may have to provide more funds for this expansion. Have you more money to put into this business? Do you borrow from friends and relatives? From your bank? From your suppliers (through credit terms?) If you are starting a new business, one action may be to get a loan for fixtures, stock, employee salaries, and other expenses. Another action will be to find and to hire capable employees.

Now make a list of things that must be done to put your plan into action. Give each item a date so that it can be done at the appropriate time.

To put my plan into action, I must:

1. Do (action) _________ By _________(date)

2. etc.

Keep Your Plan Current

Once you put your plan into action, look out for changes. They can cripple the best business no matter how well planned. Stay on top of changing conditions and adjust your business plan accordingly. Sometimes the change is within your company. For example, several of your sales persons may quit. Sometimes the change is with the customers whose desires and tastes shift and change or refuse to change. Sometimes the change is technological as when products are created and marketed.

In order to adjust your plan to account for such changes, you the owner-manager, must:

Be alert to the changes that come about in your line of business, in your market, and in your customers.

Check your plan against these changes.

Determine what revisions, if any, are needed in the business plan.

The method you use to keep your plan current so that your business can weather the changing forces of the market place is up to you. Read trade and business papers and magazines and review your plan periodically. Once each month or every other month, go over your plan to see whether or not it needs adjusting. Certainly you will have more accurate dollar amounts to work with after you have been in business for a time. Make revisions and put them into action. You must be constantly updating and improving. A good business plan must evolve from experience and the best current information. A good business plan is good business.

Getting the Money Required to Starting a New Small Business. Now that You have calculated your first financing requirements, where
will you get the money? The primary source is your personal savings. Subsequently relatives, friends, or other individuals might
be found who would like to"enterprise" their savings in your business. Before getting too large a share of money from external
sources, remember you should have private control of enough to assure yourself possession.

After you can show that you have closely exercised your fiscal Requirements and can demonstrate experience and ethics, a financing
institution might be willing to finance a part of your operating needs. This could possibly be done on a short-term basis of from
60 days to up to one year. Any institution which has money to give is mainly concerned with security. The safety may be a business
asset, but if you're just starting the best safety is usually your house or some other private asset.

The next thing that the lender will want to see is Some Kind of Business plan. If you complete a business strategy - which
includes a cash flow forecast - the lender will observe that you have completed some realistic and serious thinking about your
company and be more inclined to consider your request.

Become acquainted with your banker. In picking a banker consider Progressiveness, attitude toward your company, credit services
offered, and also the size and direction policies of the lender. Is the lender progressive? The physical look of this bank may
provide you some indication. When the employees are pretty youthful, interested in your problems and active in civic affairs that
the bank is very likely to be progressive. The nature of the lender's advertisements may also be an indicator for its
progressiveness.

To be effective the banker Ought to Be interested in Assisting You to Become a better manager, and develop a lasting relationship
that will mean profitable business for you as well as the bank over the years.

Will the lender offer you the type of credit you need? For example, If seasonal accumulations of inventory become an issue will
the bank create a loan against field or public warehouse receipts? If your capital is tied up in accounts receivable during your
hefty selling year, will the bank take these receivables as collateral for a loan? Will the lender consider a term loan?

Finally, understand the size and direction policies of the bank. Will Your maximum requirements fall well within the
lender's"legal limit"? If you intend to do some export business, does it have a foreign exchange department? In the event that you
or your dealers sell on installment conditions does the lender have facilities for managing installment paper? How profoundly is
the lender concerned with the growth and prosperity of the local community?

When you deal with your banker, then sell your self. Whether or not you Need a bank loan, make it a practice to stop by your
banker at least once every year. Openly discuss your plans and difficulties. It is the bank's company not to betray a confidence.
If you require financial aid carefully organize, in written form, complete information that'll present a thorough comprehension of
your whole proposition. Many business-people or potential small business operators destroy their chances of getting financial aid
by neglecting to present their proposition properly.

Trade creditor or gear manufacturer, Companies from which you Buy equipment or merchandise may also provide capital for you in the
form of extended credit. Manufacturers of store fixtures, cash registersindustrial machinery frequently have financing plans under
which you may purchase on an installation basis and pay from future income. You need not cover the merchandise at once. If goods
are for resale, then no safety aside from repossession rights of these unsold merchandise is involved. However, too long a use of
credit can prove expensive. Usually cash discounts are quoted when a bill is paid within 10, 30, or 60 days. By way of example, a
duration of sale quoted as"2-10; net 30 days" means a cash discount of 2 percent will be granted if the bill is paid within 10
days. If not paid in 10 days, the whole amount is due in 30 days. If you don't take advantage of the cash discount, you're paying
2% to use money for 20 days, or 36 percent per year. That is high interest. Avoid it.

Among the main causes of failures among businesses is Inadequate funding. If you do go into company, remember it is your
obligation to provide, or obtain from others, sufficient money to provide a firm foundation for your enterprise.

Sharing Ownership With Other People. Now that you have determined what Business to begin and how much funds will be required, you
might find it necessary to connect with a couple of associates to establish the enterprise.

If you lack specific technical or management skills which are of Major importance to your preferred company a partner with these
abilities may prove a most satisfactory way to cover the deficiency. If you are very proficient in your special area but lack
direction training and abilities, you may look for a partner using a background in direction. If you may want more start-up money,
sharing the ownership of this business is one way to get it. Fantastic care should be taken in deciding upon a spouse. Personality
and temperament, in addition to capability to render financial or technical assistance, affect the achievement of a pa333ship.

A partnership can be a mixed blessing. A spouse who puts in time Or cash has a right to expect a share in running the business.

In a partnership the liability for the debts of the firm is Unlimited, just as it is in a single proprietorship. Therefore, the
owners are Personally responsible for the company's debts, even in excess of the amount they Have spent in the business. In a
corporation the accountability of the proprietor is limited To the amount they pay for their shares of stock. A partnership, like
a single proprietorship, lacks continuity. Thus, the Company terminates upon the Death of the owner or a partner, or on the
withdrawal of a partner.

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