“A man, a plan, a canal, panama” might be one the world’s longest palindromes, but it also makes a point.
Theodore Roosevelt undertook one of the largest and most ambitious projects in world history by starting with a plan. Key to the completion of the connecting waterway between two oceans was a vision. A plan.
So it is with any business. To get where you are going you need a roadmap, a plan. Behind every successful business is a plan.
Typically outlined in any business plan are three things:
That last one is just as important, if not more so, than the first two. “Money makes the world go ‘round” as the song goes, but that’s adding too many metaphors into this story.
As we’ve covered in another post, cash management is critical, especially to the new enterprise. Having cash to operate and expand is part of that planning. If you don’t have a plan for that incoming investor’s cash, then it is just going to leave as fast as it arrived, and without accountability. To be able to account for that incoming and where it is going and what it is being applied to (what it is doing) can only come with a plan. And when the bank or the investor comes calling, you best be able to answer (and show them) where the infusion went, for what and what the potential return with be and when they can expect it.
Built in parallel and as a part of the overall business plan, the finance plan should do the following:
- Outline how much cash is needed
- Where it will be going
- The expected return
Be able to answer anticipated questions from your investors. In the long run, it will save you pain and suffering as well as cash. And that takes a plan.
The TFO Team
(* photos courtesy of the National Constitution Center and Upsplash)