Research Your Business Plan – Part III

You have now completed the ‘Who’, ‘What’ and ‘Where’ of your plan as a part of the start-up function.  We will now complete the ‘When’ section of the plan.  Remember, you have not formally documented any of these steps.  You should have taken good notes so far, learned a lot and hopefully still have your enthusiasm. 

Timing is everything, you have heard this before.  Well, it is applicable here.  I once had a potential client come to me in the middle of June seeking my endorsement to his business plan.  He needed to borrow money for his idea.  He wanted to sell fireworks.  July 4th was less three weeks away.  I looked at him as if he were crazy.  It would take me at least 4 days to sign off on the plan and then it would take another 5 days to close on the loan with the bank.  By the time he arranges for his permits and supplies, he would be about 7 days shy of July 4th.  It was already too late.  Don’t make this mistake.

Think about your idea, is it time sensitive?  There are many industries and business ventures that are tied to holidays, seasonal events (e.g. sports related), or functional in nature e.g. tied to the school system calendar.  You have to plan ahead and think this through.  It will always take longer to implement, find the money, and get the supplies or materials you need to fulfill the requirements of your idea. 

To plan something out, think about the opening day of business and work your way backwards.  Let’s use the fireworks guy as our model.  If you are selling fireworks, the weekend before the 4th is going to be your biggest sales point for this venture.  You have some partial sales about three weeks before the holiday, but you will want to have all your supplies prior to June.   Now go to your supplier’s delivery schedule.  I guarantee he can’t deliver in one day.  He will need several weeks of lead time.  Now we are backed up to early May to place the order.  That’s when you’ll need your cash to pay for the order. 

Now that you’ve addressed the supplier side of the equation, you will have to negotiate your site deal.  If you are in a lot next to a main road or intersection, don’t wait until June to agree to terms.  You will have to have completed this in the prior March time frame.  This is for several reasons:  First, you need to know about access to power for lights and setting up parking.  The local government will require a business license.  The license requires a physical address of where your tent and tables will be located.  Many communities require an inspection or approval by the local codes department.

So to make this all work, you should be totally ready by February 1st prior to the holiday.  This means money arranged, supplies set-up, the logistics negotiated for power, parking, sanitation etc.  Get the permits and you are ready to go.

Notice that something as simple as a vendor table with some product displayed has a multitude of details to address just to be prepared.  Hopefully this drives home the point about timing.  Set up your time line.  Document the respective minimum deadlines and then add a couple of months.  Now complicate this with something like a restaurant or a manufacturing process and you can see the value of establishing a timeline.

If other individuals are involved in the performance or preparation it just lengthens the timeline that much more.  Throw in a contractor to do work and now you are looking at a year of lead time.  If your business is going to require space modifications, you have to have a negotiated deal for the space first.  Then some type of period of time to modify and prepare the space for business operations.  Can you imagine the details involved in a custom designed technology based operation?  This will require coordination between the contractor and the technology company, even the electrician is involved. 

The point of all this is to be realistic about the time frame of getting prepared, the more sophisticated the business endeavor the longer the timeline involved.

Use your head, draft out a timeline to get to opening day, add in weeks and months during this process to complete all the tasks involved.  If licensed individuals are a part of the equation, add even more time to the calculation.  If engineering or architecture is required, well, you really need to be patient here because they take four times as long as you may think.

Planning and documenting the needs will fill in the timeline for you.  By using your head and resources you can estimate with some good confidence the amount of time it will take to properly prepare for opening day.  Act on Knowledge.

If you have any comments or questions, e-mail me at dave (insert the usual ‘at’ symbol) businessecon.org.  I would love to hear from you. If interested in my services as an accountant/consultant; click on My Services in the footer of this article.

 

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About David J Hoare 427 Articles
I spent 12 Years as a Certified Public Accountant, Over 20 Years of Practice in Accounting and Consulting, Controller in Management of Closely Held Operations, Masters of Science in Accounting, Prepared over 1,000 Business Tax Returns and Hundreds of Individual Returns

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