Basic Business Plan
What is a business plan?
With most great business ideas, the best way to execute them is to have a plan. A business plan is a written outline that you present to others, such as investors, whom you want to recruit into your venture. It’s your pitch to your investors, sharing with them what the goals of your startup are and how you expect to be profitable.
It also serves as your company’s roadmap, keeping your business on track and ensuring your operations grow and evolve to meet the goals outlined in your plan. As circumstances change, a business plan can serve as a living document – but it should always include the core goals of your business.
Business Plan Steps:-
The specific information in your business plan will vary, depending on the needs and goals of your venture, but a typical plan includes the following ordered elements:
2.Description of business
5.Description of organizational management
6.Description of product or services
9.Funding details (or request for funding)
Assessing essential finances:-
Apart from your specific goals, here are seven key financial metrics to evaluate.
1. Net Worth:-
If you could look at only one metric to evaluate your progress, it would be your net worth (assets – liabilities). Our net worth reflects all of the financial decisions we’ve made throughout our lifetime. Think of it as your financial report card.
2. Debt Levels:-
The next step is to look at your debt and ask two questions. First, did your total debt go up or down over the past year? Second, and just as important, did you borrow money over the last 12 months? Some may have been able to reduce their overall debt, even though they borrowed more money during the year and then repaid it. The key to getting out of debt for good is simple–stop going into new debt.
3. Retirement Planning:-
At least annually we should evaluate whether we are on track to meet our retirement goals. A simple approach is to assess whether we are contributing the maximum amount allowed to 401k, IRA, and other retirement accounts. To go deeper, one of several free retirement planners can quickly assess where you stand.
4. Credit Report & Score:-
Checking your credit reports at least annually is important for several reasons. First, it can alert you to identity theft by showing your open accounts. Any accounts listed that you didn’t opened should be investigated immediately. Second, it’s not uncommon for creditors to report incorrect information. Regularly reviewing your credit report can catch these errors. Third, it keeps you focused on paying your debts on time and otherwise managing your credit wisely.
There are two key aspects of savings that should be evaluated. First, consider whether your cash position is sufficient to handle all short term needs and unexpected emergencies. Three to six months of expenses is a common rule of thumb, although I prefer one year.
No financial assessment would be complete without considering education. For some that means evaluating 529 plans and other college savings accounts for children. For others it means evaluating options for consolidating or refinancing school loans (here are several options) in an effort to pay off the debt as quickly and inexpensively as possible.
Finally, the end of the year is a perfect time to analyze your investments. The starting point is to determine whether rebalancing your portfolio is necessary in light of your investment plan. It’s also a good time to determine whether you can lower your investment costs by switching mutual funds, investment advisors, or both. Lastly, consider whether you are taking full advantage of tax-advantaged retirement, education, and health savings accounts.
Asses initial Finances (Seed Fund)
What is Seed Funding?
"Seed Funding" is the initial stage of funding a new startup. Startups with a new idea find it very hard to get angel investors interested in investing in their company when they cannot demonstrate the viability and likelihood of success of their new concept. Contacting banks for a loan isn't an easy task if they do not have the necessary conditions to provide banks with security for the loan. Seed funding can help startups that can come up with an original idea but lack the funds to carry out proof of concept, product testing, or prototype development tests.
How to Determine the Legal Structure of Your Business"
Should your business be a proprietorship, partnership, limited partnership, C corporation, S corporation, or LLC? Be informed to help determine the best business structure for you
Easy to form — As mentioned, this is the easiest business structure to set up. Minimal amounts of paperwork and red tape are associated with this type of business format.
Least expensive to set-up — Costs vary depending upon where you live, but typically all you'll need to pay is a nominal business license fee and maybe a business tax. Contact your city or county government offices for their requirements.
Ease of dissolution — Just as easy as setting up this type of business is ending it. As sole owner, you can dissolve your business at any time. There is no legal waiting period or formal paperwork involved.
Sole recipient of profits (and losses) — You, as owner, receive all of the profits and losses from the business. Profits and losses are reported directly on your individual income tax return. In the event that you suffer business losses, you can deduct them against any other income you may have to reduce your overall tax burden.
For example, Gina has decided to start up her own advertising firm on a part-time basis. Her plan is to continue her job as Director of Advertising for her town's leading newspaper until she is making enough money on her own to go it alone full-time. In the first years of operating her part-time business, Gina is able to off-set her income from the newspaper with the net losses from her part-time business to reduce the overall income tax she must pay as an individual.
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