Help you stay on-track with ______________ goals \n
Important to set personal financial goals!
Long Range
Benefit is increasing in the detail provided \n
Benefit to ________________ data, understand WHY
Disaggregated
Forces you to ____________ on an on-going basis
Think Ahead
Helps to evaluate ___________________ \n
Evaluate budget variances after-the-fact
Prior Performance
In case of _______, large cost if you run out of cash \n
Business: planning financing in advance is critical \n
Personal: interest rates on credit cards are very high
Defecit
Less ___________ w/ salary than business revenue \n
Overall: less exposure to environmental uncertainties \n
Difference in risk tolerance: one benefit firms provide \n
Fewer assumptions to make, easier to make forecasts
Uncertainty
No ____________ costs \n
No second party w/ incentive to build “fat” in budget \n
You must hold yourself accountable to the budget
Agency
Cash basis vs. __________ basis accounting \n
Notice I used the term “expenditures,” not expenses \n
No need for separate personal cash budget
accural
No control over ___________ returns (market risk)
investment
One of the ways that organizations __________ is through the introduction of new programs, \n projects, and other ventures
prosper
A business plan is a document that provides the \n information needed to determine whether the \n venture is likely to _______________________
fail or succeed
A business plan should help you assess whether the proposed venture is ___________, whether it fits the organizational ___________, and whether it will be financially __________
sensible;
mission;
viable
To discover weaknesses and eliminate bad proposals at an ________________
early stage
To support the idea with ____________ instead of merely opinion; is this a good idea?
evidence
To help to ____________ what we do and do not know about the venture
Clarify
To provide a basis to identify and analyze elements of a proposal that are ____________ to its success
Critical
To convince others (e.g., our boss or investors) that the idea is a good one, worthy of __________________
financial support
What is the venture that is being proposed?
Business Question
Why would our organization want to do it? How \n does it connect to our _________________?
Strategic plan
Who will we provide products or services for? \n •How much will potential customers pay? \n •How many potential customers are there?
What will our share of the market be? (That is, \n who will our _________________ be?)
competitors
Market analysis must be conducted to assure that there exists some ________ for the \n product/service \n
Will customers pay the price we want to charge?
Demand
Will existing or potential competition will make it too difficult to gain adequate ________________?
\n What does the competition look like? What are our strengths and weaknesses relative to them? \n
If there isn’t any current competition ... why? \n
Will competition arise if we are successful?
Market Share
How will we gain our desired market share? \n
A proactive __________________ is essential
marketing plan
It is important to determine whether the proposed venture is expected to be financially ___________ \n
Typically forecast both the future profits and cash flows
Feasible
____________ forecasts require that we anticipate: \n
Demand and prices \n
Start-up lag (will take time to get organized) \n
Growth rates (once organized and customers find us) \n
Seasonal factors
Revenue
Also forecast the expected _________ costs, capital __________ needs, and ongoing __________ costs \n
Include both direct production costs and also indirect costs such as marketing and administration
start-up;
equipment;
operating
We forecast both expected profits and cash flows
Why do we need to project cash flows?
It is possible for a profitable venture to fail because it ______________ of cash
runs out
The more successful the new venture is, the more likely it requires large amounts of cash for continued investment during the _____________
growth stage
Therefore, the business plan must:
Anticipate how long it will take the venture to achieve profitability and
Estimate how long it will take until it achieves a level of ______________________
positive cash flow