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.

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.

Value Investing

Do you want to learn how to get returns like this?

Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

There are four key principles used with value investing. Each is required. They are:

  1. Risk Reduction – Buy only high quality stocks;
  2. Intrinsic Value – The underlying assets and operations are of good quality and performance;
  3. Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
  4. Patience – Allow time to work for the investor.

If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above. 

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:

  1. Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
  2. Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
  3. Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.

Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:

  • Lessons about value investing and the principles involved;
  • Free webinars from the author following up the lessons;
  • Charts, graphs, tutorials, templates and resources to use when you create your own pool;
  • Access to existing pools and their respective data models along with buy/sell triggers;
  • Follow along with the investment fund and its weekly updates;
  • White papers addressing financial principles and proper interpretation methods; AND
  • Some simple good advice.

Value Investment Club

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