Business plan template.pdf

What terms will you offer your customers that is how

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What terms will you offer your customers; that is, how much credit and when is payment due? Do you offer prompt payment discounts? (It is best to do this only if it is usual and customary in your industry.) Do you know what it costs you to extend credit? This includes both the cost of capital tied up in receivables and the cost of bad debts. Have you built the costs into your prices? You should do an aging at least monthly to track how much of your money is tied up in credit given to customers and to alert you to slow payment problems. A receivables aging looks like the following table. Table 2: Accounts Receivable Aging Total Current 30 Days 60 Days 90 Days Over 90 Days Accounts receivable aging Collecting from delinquent customers is no fun. You need a set policy and you need to follow it. When do you make a phone call? When do you send a letter?
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Page 19 of 29 When do you get your attorney to threaten? Managing Your Accounts Payable You should also age your accounts payable (what you owe to your suppliers). Use this format. Table 3: Accounts Payable Aging Total Current 30 Days 60 Days 90 Days Over 90 Days Accounts payable aging This helps you plan whom to pay and when. Paying too early depletes your cash, but paying late can cost you valuable discounts and damage your credit. (Hint: If you know you will be late making a payment, call the creditor before the due date. It tends to relax them.) Are prompt payment discounts offered by your proposed vendors? Do you always take them?
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Page 20 of 29 Management and Organization Who manages the business on a day-to-day basis? What experience does that person bring to the business? What special or distinctive competencies? Is there a plan for continuation of the business if this person is lost or incapacitated? If you have more than 10 employees, prepare an organizational chart showing the management hierarchy and who is responsible for key functions. Include position descriptions for key employees. Professional and Advisory Support List the following: Board of directors and management advisory board Attorney Accountant Insurance agent Banker Consultants Mentors and key advisors
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Page 21 of 29 Personal Financial Statement Owners often have to draw on personal assets to finance the business. This statement will show you what is available. Bankers and investors usually want this information as well. They will ask owners to cosign or personally guarantee any business loans. Document your assumptions, notes, definitions, and any special financial situation. Include details of notes, securities, contracts, etc. on the bottom of a personal financial spreadsheet. Include one such spreadsheet for each principal.
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Page 22 of 29 Financial History and Analysis A solid analysis of the past must precede any serious attempt to forecast the future. A financial history and ratios spreadsheet will allow you to put a great deal of financial information from other statements on a single page for ease of comprehension and analysis. You may also enter industry average ratios for comparison.
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