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4 Questions To Ask Yourself Before Writing A Business Plan – Part 2

Announcement posted by BudgetOne 20 Oct 2016

4 Questions To Ask Yourself Before Writing A Business Plan – Part 2

Many people misinterpret business planning to mean writing a business plan.

When in fact, writing a business plan is the end stage of business planning.

In part 2 of "4 Questions To Ask Yourself Before Writing A Business Plan," we'll cover the necessities of understanding what money, if any, is available to fund your business and then move on to essential due-diligence homework when researching an existing business or franchise?

If you can confidently answer these final two pre-qualifying questions, then you are in a very strong position and ready to begin writing a business plan that unlocks your dream and sets you up for success.

3. What can you financially contribute to the business?

Before rushing to a bank and getting finance, it’s important for you to know how much you spend on your lifestyle, how much can you contribute to the business and how much you will need to borrow.

By first understanding your personal position and what lifestyle costs will need to be covered, it will soon become apparent if you have a level of self-funding available.

Knowing whether you have enough to start or grow is not necessarily the right way of thinking.  What you should be asking yourself and calculating is "how much additional money will be needed to carry the business until it starts to be profitable?"

Do you need clarity around your lifestyle and family costs?

Budget One’s Personal Budget Plan will show you if you are spending more or less than you can afford and provide you with a road map to balance your spending and saving.

The review will highlight where you should direct your money most so you can stay on top of bills and if there is additional money available for desired or family treats as well as starting or growing a business.

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4. How well do you know an appealing business or franchise? 

I'm going to sound like a parrot, but before launching into buying an existing business or franchise, you must do your homework and do it well.

The more questions you ask, the less risk there will be. Failing to ask the right questions could easily see your doors shutting within a few years.

Here's a few questions that should definitely be on your due-diligence check-list.

Will you supply complete financial documentation of the business?

You will need access to the business' financial data to assess the strength of the business and future earnings.  This will also help you validate their asking price.

What are your biggest hurdles right now?

Most sellers with give you just the bells and whistles, but generally if a business is selling, they are experiencing some pains.  Finding out these issues is critical to determining the risk involved and provides you with vital information for determining if this business is the right fit as well as room for negotiation.

How did you arrive at your asking price?

Get the seller and or franchisor to prove with quantitative information, how they came up with their asking price.  Many owners and even some franchisors stumble on this question.

How much does your business depend on a key customer?

If a business or franchise territory relies heavily on one or even two customers and they are potentially loyal to the previous owner, there is a very high risk that they will jump ship, leaving you high and dry with no clientele.

Requesting to contact existing clients and finding out their intentions is the best way to confirming the likelihood of income and the perfect opportunity to asking and listening to what they want.

Do you need help with your due-diligence?

Budget One can work with you to lower the risk and find the right business or franchise model that meets your desired result.

Our Start Up Success program will review and challenge the business plan and financials to make sure you’re selecting and entering into a business with a robust profit model.

Our team will crunch the numbers and shape questions for you to take back so you can make a well-informed decision and potentially avoid making a costly mistake.

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If you can confidently answer three or four of our pre-qualifying questions then you are ready to begin writing a business plan.

Author Taso Tounis

Taso Tounis is a business planning, cash flow management and budgeting consultant. He is passionate about equipping soon-to-be business owners with insightful knowledge on the outlook of a prospective business so they can decide if its the right fit and has great success potential. Learn more  about Taso.

Want to know more about Budget One? Read more on our strategic planning, cash flow management, budgeting and financial services.