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Secrets of a Successful Business Plan: How to Properly Plan the Financial Aspects of a Startup

Starting a business is often presented as complex and confusing, which discourages young entrepreneurs. Indeed, planning the financial model of a startup isn’t as easy as hitting the jackpot at https://ivibet.com, but it’s quite realizable. Let’s look at what financial aspects should be emphasized when developing a business plan.

Why You Need a Business Plan

A business plan fulfills several tasks at once:

Helps You Attract Financing

A business plan is the number one thing potential investors look at. If you need investment to start a business, you should be attentive to its preparation and presentation.

Is a Reference Point for the Entrepreneur and Partners

It’s easier to move towards the goal when you have a navigator. A business plan is a roadmap to check against as the company grows. It helps you keep your business objectives, plans, and prospects in focus.

What Should a Business Plan Include

Follow the structure:

  • Summary. It describes the main idea of the project, its objectives, goals, mission, and values. If financing is to be raised, indicate this in the summary and describe what investment channels are planned to be used. The executive summary should be succinct but concise and catchy.
  • Description of the product/service. Describe in detail all the advantages of the future project, the competitive advantages, and describe the target audience.
  • Market and competitor analysis. Provide analytics on your segment, indicate the advantages and disadvantages of existing projects, and tell how you plan to stand out among others. 
  • Production calculations. Calculate all the costs that will arise at the first stage: the purchase of equipment and consumables, the cost of the product. Describe how the production process, logistics, and work with customers will be organized.
  • Marketing plan. Specify how exactly you will attract customers, what promotion channels you will use, and how much money you plan to spend on this.
  • Management. Spell out the organizational structure of the enterprise, who will be responsible for what, and plans to increase the team.
  • Possible risks. Calculate what can go wrong and what you will do in this case. Such foresight will prove interest in the case and a professional approach to business.

All points of the business plan are important to accompany detailed calculations and verified data. Don’t manipulate the figures or embellish them. If the deception is revealed, you will lose the trust of investors, and it will be more difficult to find money.

In order for the business plan to be informative, let’s look at the financial aspects that are important to consider when drafting it.

Financial Aspects of the Business Plan

Cost Calculation

Calculating the cost of production is one of the primary tasks that you need to perform during the business plan development stage.

Cost is made up of a number of factors that can be added or removed, depending on the particular product or service.

For example, if you plan to sew clothes at home, you do not need to include in the cost of rent and wages of employees (if there are no plans to expand).

However, the following items are most often included in the calculations:

Purchasing Raw Materials and Goods

The first item is the most obvious when it comes to calculating the cost of production. It’s the cost of purchasing raw materials for production or goods for sale.

Analyze suppliers, compare prices, and determine delivery terms. Read reviews of suppliers: whether their products are of high quality, whether they honor agreements, and how they communicate with customers and resolve disputes.

Talk to the supplier’s representatives directly. Some offer discounts on the first purchase.

Rent and Renovation of Premises

Decide what size of premises you need and how important the location is. If you plan to expand your business in the short term, consider a space that can be expanded in the future.

You need to take into account the cost of repairs. Most often, the premises are not in the most attractive condition. So some regular repairs may be necessary, even if there are no plans to receive clients there.

And remember to include the cost of utilities.

Equipment

Equipment costs tend to be the highest, which is why they require particularly careful calculation.

Make a list of everything you need to produce goods or provide services. Don’t forget about depreciation and emergency repairs. Also, consider the consumables needed to run the equipment (e.g. fuel).

Packaging

Every product needs proper packaging. Proper means suitable for the characteristics of the product itself and the price segment in which it will be sold.

For example, you can make the most delicious candies in the world, with the most delicate praline, from expensive Belgian chocolate. But it will be strange to sell them in cellophane bags. You need packaging that corresponds to the quality of the chocolate. Otherwise, it won’t be bought for a decent price.

Promotion Costs

Be sure to factor in marketing costs. What good is the coolest product or service if no one knows about it?

If you’re not good at this, it makes sense to hire a professional to calculate your promotion budget with your goals and objectives in mind.

This may include spending on online advertising, social media, outdoor advertising, or print ads.

Employee Salaries

If you plan to hire employees, it’s important to include payroll costs in your calculations as well. Consider payroll with an allowance for growth in the foreseeable future, if any.

This should also include the costs of specialists who will be hired on an occasional basis: designers, marketers, couriers, and repairmen.

Don’t forget about taxes. They should also be included in the estimate.

Taxes

Tax contributions from business profits need to be made at the end of the calendar year. The amount of taxes payable will depend on the taxation system you choose.

The cost of the product/service will depend on the above factors, and the payback depends on it in turn.

Don’t spare time for detailed calculations of your startup’s financial plan, the more scrupulous you are in making estimates, the more likely you are to get investment and recoup your project.

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