Steps to Ownership
Recognizing that inattentiveness to financial details was probably the root cause of the bankruptcy, it is important to develop a comprehensive business plan to identify true costs and potential obstacles to success. A well written business plan includes elements such as:
* Purpose Summary: This provides an explanation of the business, its mission statement and other critical information that outlines the essential functions of the business.
* Key Personnel: Identifies who will be filling specific roles that will drive the business.
* Identifying Markets: The definition of the market area, its demographics and strategies for identifying opportunities for business growth.
* Products: Defining the essential objective of the business in terms of the products and services it will provide.
* Budget and Financial Requests: The Budget provides a financial blueprint which identifies overhead and the sales and profit margins required to meet it. By generating a realistic budget, logical funding requests can be developed while allowing a potential lender to make a judgment that is based on the soundness of the business plan.
Developing a budget is a bottom up process that starts with the identification of actual expenses. This will include items such as rent, utilities, salaries, insurance, taxes and any other identifiable expense that is a financial requirement to operate the business. Thoroughness in recognizing true costs can not be overstated.
From the cost assessment, the entrepreneur can then produce the monthly sales required to meet overhead and generate a profit at a given profit margin.