Thinking of starting a business...
11/23/06, 06:48 PM
#1
Mach 1 Member
Thread Starter
Join Date: November 11, 2004
Location: South Georgia
Posts: 900
Likes: 0
Received 0 Likes
on
0 Posts
Thinking of starting a business...
I'm doing the business plan, and specifically the executive summary.
I'm using Entrepreneur.com's guide on making a business plan.
I'm at "2.) Financial Features" and i'm stuck. It wants information on sales, profits, cash flows, and return on investment.
Sales...I have no idea, how the heck would I know how much an average business in this market sells? And what exactly does it want, like x products/x time? Or $x/x time?
Profits...Again, can't really find this out, I guess that I could get in contact with a few wholesalers/distributors and get pricing and then figure up an average markup percentage.
I understand cash flow, so I don't need any help there.
Return on investment...return on my investment or the bank's? The bank doesn't really get a return on investment, do they? Other than you paying your financed loan every month. Is this really just for people who are actually getting investors (and not going through a bank)?
Everything else on the executive summary i'm okay with.
By the way, the business is vehicle OEM and aftermarket part sales.
I'm using Entrepreneur.com's guide on making a business plan.
I'm at "2.) Financial Features" and i'm stuck. It wants information on sales, profits, cash flows, and return on investment.
Sales...I have no idea, how the heck would I know how much an average business in this market sells? And what exactly does it want, like x products/x time? Or $x/x time?
Profits...Again, can't really find this out, I guess that I could get in contact with a few wholesalers/distributors and get pricing and then figure up an average markup percentage.
I understand cash flow, so I don't need any help there.
Return on investment...return on my investment or the bank's? The bank doesn't really get a return on investment, do they? Other than you paying your financed loan every month. Is this really just for people who are actually getting investors (and not going through a bank)?
Everything else on the executive summary i'm okay with.
By the way, the business is vehicle OEM and aftermarket part sales.
11/23/06, 08:41 PM
#2
Cobra R Member
Join Date: July 9, 2006
Location: Hillsboro MO, just south of St. Louis
Posts: 1,763
Likes: 0
Received 3 Likes
on
3 Posts
Being in business for five an a half years, I never had a business plan. Personally I think its BS. NOBODY can predict what sales are going to be, if you can, retail is not your business if you know what I mean.
As for following your guidlines....
Sales. Unpredictable, see previous statement. You can guess or estimate, or even hope what you will sell. But to know exactly.. Impossiable ( unless you have a contract to produce and deliverer a set number of product at a certain time). Especially when it comes to retail sales.
Profits.. easy. the cost of purchase of material, production ( if any), rent, utilities, payroll, shipping, etc. less the percentage markup = profit. If any of these costs exceed the markup, you are loosing money... ie: loss.
Cash flow. Directly correlates with sales. Money comes in, money goes out = cash flow. You can operate at a profit loss with a high cashflow, but not for long. Cashflow pays the day to day bills, profit is what makes the business run in the long run.
Return on investment...To me this is another form of profit, only on a long term scale. mainly how much profit will I make over how long of a period of time. the higher the profit in the shorter time the better off you are. In retail sales, sometimes you have to sit on a bunch of inventory before it moves. When it comes to inventory, you can buy one at a time or buy one only when you sell one. This works well when you have suppliers who ship fast and don't up charge for 1zies or 2zies. in the real world, buy in bulk, save by buying in quanity ( findout what the price points are for bulk, ie; 5,10, 100, or 500, etc.) find out what the best price vs quantity is. The down side of this is: capital, ie money avaliable. Storage. if you have to rent space to store the product, or if you have enough room in your basement or garage. Competition, are you buying low enough to sell at a profit to come out a head, and remain equal to what others are selling the same product for. This is a tuff thing now days with the internet and foreign importers that sell for what it costs you to get it shipped to you.
Banks. They live in a pie in the sky environment of counting beans and have no regards for customers and their wants and wishes. I have proven my bank wrong on many occasions when it comes to business practices, and every once and a while they set me in my place too.
From what I have learned, when you find out how much money you need to work on, double that. I went 2 years living on my credit cards, and robbing Peter to pay Paul before I was able to start taking a regular paycheck. Another thanks to my parents for helping out when things got really tight and the bank was of no help.
By the way I have a liquor store, about 200k in inventory. I have been in sales most of my life and the seven years before the store I was a vendor for Home Depot. I learned all their theories and philosophies and applied it to my business. the worst part of it is, it is now my check book and not theirs.
Any other questions let me know... hopefully I can answer them a bit shorter...LOL.
Good luck
As for following your guidlines....
Sales. Unpredictable, see previous statement. You can guess or estimate, or even hope what you will sell. But to know exactly.. Impossiable ( unless you have a contract to produce and deliverer a set number of product at a certain time). Especially when it comes to retail sales.
Profits.. easy. the cost of purchase of material, production ( if any), rent, utilities, payroll, shipping, etc. less the percentage markup = profit. If any of these costs exceed the markup, you are loosing money... ie: loss.
Cash flow. Directly correlates with sales. Money comes in, money goes out = cash flow. You can operate at a profit loss with a high cashflow, but not for long. Cashflow pays the day to day bills, profit is what makes the business run in the long run.
Return on investment...To me this is another form of profit, only on a long term scale. mainly how much profit will I make over how long of a period of time. the higher the profit in the shorter time the better off you are. In retail sales, sometimes you have to sit on a bunch of inventory before it moves. When it comes to inventory, you can buy one at a time or buy one only when you sell one. This works well when you have suppliers who ship fast and don't up charge for 1zies or 2zies. in the real world, buy in bulk, save by buying in quanity ( findout what the price points are for bulk, ie; 5,10, 100, or 500, etc.) find out what the best price vs quantity is. The down side of this is: capital, ie money avaliable. Storage. if you have to rent space to store the product, or if you have enough room in your basement or garage. Competition, are you buying low enough to sell at a profit to come out a head, and remain equal to what others are selling the same product for. This is a tuff thing now days with the internet and foreign importers that sell for what it costs you to get it shipped to you.
Banks. They live in a pie in the sky environment of counting beans and have no regards for customers and their wants and wishes. I have proven my bank wrong on many occasions when it comes to business practices, and every once and a while they set me in my place too.
From what I have learned, when you find out how much money you need to work on, double that. I went 2 years living on my credit cards, and robbing Peter to pay Paul before I was able to start taking a regular paycheck. Another thanks to my parents for helping out when things got really tight and the bank was of no help.
By the way I have a liquor store, about 200k in inventory. I have been in sales most of my life and the seven years before the store I was a vendor for Home Depot. I learned all their theories and philosophies and applied it to my business. the worst part of it is, it is now my check book and not theirs.
Any other questions let me know... hopefully I can answer them a bit shorter...LOL.
Good luck
11/23/06, 08:51 PM
#3
Mach 1 Member
Thread Starter
Join Date: November 11, 2004
Location: South Georgia
Posts: 900
Likes: 0
Received 0 Likes
on
0 Posts
Being in business for five an a half years, I never had a business plan. Personally I think its BS. NOBODY can predict what sales are going to be, if you can, retail is not your business if you know what I mean.
As for following your guidlines....
Sales. Unpredictable, see previous statement. You can guess or estimate, or even hope what you will sell. But to know exactly.. Impossiable ( unless you have a contract to produce and deliverer a set number of product at a certain time). Especially when it comes to retail sales.
Profits.. easy. the cost of purchase of material, production ( if any), rent, utilities, payroll, shipping, etc. less the percentage markup = profit. If any of these costs exceed the markup, you are loosing money... ie: loss.
Cash flow. Directly correlates with sales. Money comes in, money goes out = cash flow. You can operate at a profit loss with a high cashflow, but not for long. Cashflow pays the day to day bills, profit is what makes the business run in the long run.
Return on investment...To me this is another form of profit, only on a long term scale. mainly how much profit will I make over how long of a period of time. the higher the profit in the shorter time the better off you are. In retail sales, sometimes you have to sit on a bunch of inventory before it moves. When it comes to inventory, you can buy one at a time or buy one only when you sell one. This works well when you have suppliers who ship fast and don't up charge for 1zies or 2zies. in the real world, buy in bulk, save by buying in quanity ( findout what the price points are for bulk, ie; 5,10, 100, or 500, etc.) find out what the best price vs quantity is. The down side of this is: capital, ie money avaliable. Storage. if you have to rent space to store the product, or if you have enough room in your basement or garage. Competition, are you buying low enough to sell at a profit to come out a head, and remain equal to what others are selling the same product for. This is a tuff thing now days with the internet and foreign importers that sell for what it costs you to get it shipped to you.
Banks. They live in a pie in the sky environment of counting beans and have no regards for customers and their wants and wishes. I have proven my bank wrong on many occasions when it comes to business practices, and every once and a while they set me in my place too.
From what I have learned, when you find out how much money you need to work on, double that. I went 2 years living on my credit cards, and robbing Peter to pay Paul before I was able to start taking a regular paycheck. Another thanks to my parents for helping out when things got really tight and the bank was of no help.
By the way I have a liquor store, about 200k in inventory. I have been in sales most of my life and the seven years before the store I was a vendor for Home Depot. I learned all their theories and philosophies and applied it to my business. the worst part of it is, it is now my check book and not theirs.
Any other questions let me know... hopefully I can answer them a bit shorter...LOL.
Good luck
As for following your guidlines....
Sales. Unpredictable, see previous statement. You can guess or estimate, or even hope what you will sell. But to know exactly.. Impossiable ( unless you have a contract to produce and deliverer a set number of product at a certain time). Especially when it comes to retail sales.
Profits.. easy. the cost of purchase of material, production ( if any), rent, utilities, payroll, shipping, etc. less the percentage markup = profit. If any of these costs exceed the markup, you are loosing money... ie: loss.
Cash flow. Directly correlates with sales. Money comes in, money goes out = cash flow. You can operate at a profit loss with a high cashflow, but not for long. Cashflow pays the day to day bills, profit is what makes the business run in the long run.
Return on investment...To me this is another form of profit, only on a long term scale. mainly how much profit will I make over how long of a period of time. the higher the profit in the shorter time the better off you are. In retail sales, sometimes you have to sit on a bunch of inventory before it moves. When it comes to inventory, you can buy one at a time or buy one only when you sell one. This works well when you have suppliers who ship fast and don't up charge for 1zies or 2zies. in the real world, buy in bulk, save by buying in quanity ( findout what the price points are for bulk, ie; 5,10, 100, or 500, etc.) find out what the best price vs quantity is. The down side of this is: capital, ie money avaliable. Storage. if you have to rent space to store the product, or if you have enough room in your basement or garage. Competition, are you buying low enough to sell at a profit to come out a head, and remain equal to what others are selling the same product for. This is a tuff thing now days with the internet and foreign importers that sell for what it costs you to get it shipped to you.
Banks. They live in a pie in the sky environment of counting beans and have no regards for customers and their wants and wishes. I have proven my bank wrong on many occasions when it comes to business practices, and every once and a while they set me in my place too.
From what I have learned, when you find out how much money you need to work on, double that. I went 2 years living on my credit cards, and robbing Peter to pay Paul before I was able to start taking a regular paycheck. Another thanks to my parents for helping out when things got really tight and the bank was of no help.
By the way I have a liquor store, about 200k in inventory. I have been in sales most of my life and the seven years before the store I was a vendor for Home Depot. I learned all their theories and philosophies and applied it to my business. the worst part of it is, it is now my check book and not theirs.
Any other questions let me know... hopefully I can answer them a bit shorter...LOL.
Good luck
Just one question as of right now, will most banks want a business plan though? I don't want to have to do a business plan, but after reading so many articles stressing the importance of them i'm a little convinced that i'm going to need one.
11/23/06, 10:12 PM
#4
Cobra R Member
Join Date: July 9, 2006
Location: Hillsboro MO, just south of St. Louis
Posts: 1,763
Likes: 0
Received 3 Likes
on
3 Posts
Check with a number of local banks and talk with them. a lot of times you can get a secured loan by using a home or car depending on the ammount. If you have really good credit you can get a signature loan but that is doubtful. Keep checking with different ones, each one has different polices for business and personal loans. SBA loans are very tuff to get and lots of paperwork, defiantly will need a business plan with them.
Thread
Thread Starter
Forum
Replies
Last Post