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Detailed Business Assumptions and Planning

   To start planning financially for your new business, you will have to make some assumptions. Some will be easy to make, as you will have the information on hand.
   While others may prove difficult that, you may have to do some crystal ball gazing. Do not despair, though. In most situations, there is a wealth of information to be had. The trick is to know where to look for it. The characteristics of the planning required for you to know what your financial needs will be just simply will not allow you to do it in one passing. You will find that your projected results will vary when you change your assumptions. You will want to develop a feeling that your planning is somewhere near what the reality is likely to be. To accomplish this, you have to make several estimates: optimistic, pessimistic and what you think is reasonable.

   Your first plans, even after you have made repeated trials, will still not be what will happen, unless you are very lucky. Nevertheless, that does not matter. What does matter is that you have now become a proficient planner. It is now in your blood. You now see what a powerful tool it is for controlling your financial affairs- indeed, your whole business. Suppose your business is card printing and you have planned and foresaw that your business cards will soon make a bang in the market, it will happen just as planned. Why? Because, you have already studied, analyzed and planned carefully about marketing them.

   Timing, proper location, right customers, and detailed approach are some of the important features presented in your plan. What you will have to do after you open your business is to substitute the real figures for the estimates, month by month. Each month you will run your projections and plans for a year, and two years ahead, by the month. You will have a rolling set of plans that will allow you to see very clearly, what your financial requirements are likely to be, way ahead of your plans actually. Then you will be able to prepare for those needs in adequate time to be assured of success of meeting them. In addition, the feedback you will get from the whole planning process will enable you to correct deviations from the course you want and to do more of whatever is producing the success.

   If you were starting a retail store, the capital budget for fixed assets would be quite different. It would include such items as display cases, counters, shelves and office equipment. Your largest single initial investment would not be in capital items like these; it would be in the beginning inventory of books. This would be an operating expense and would take working capital as contrasted with fixed asset capital.
   With the starting capital set for both fixed assets and operating expenses, you will now want to establish the basic assumptions for your first try at financial planning. The following are customary items that appear in the assumptions, although your business may need an addition or two because of its special characteristics.

   Date of staring the business. This date sets the schedule for all the rest of your plans. It can also mark the beginning of your fiscal year, which determines when you pay your income taxes. You must observe the legal requirements for setting your fiscal year.      

   The balance sheet. A statement shows what your company owns, and what it owes. What it owns is termed as assets. What it owes, which includes debts of various kinds, plus the money invested that represents ownership, are called liabilities, or sometimes, liabilities and equity.

Kaye Z. Marks is an avid writer and follower of the developments in business card printing industry. Order business cards online with PrintPlace.com.
Article By: Kaye Z. Marks
Views: 246

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