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Profit and Sales Projections

PAGE 4

Credibility Is What Counts

But they must be credible -- that is, believable or even justifiable by the remaining parts of your business plan. Earlier, I used the word, quantifiable. Your costs, pricing, and expenses must be accurately quantified. Whether it’s the cost of labor for a particular type of employee, or raw materials, or any other “expense” related to producing and selling your product, it must be accurate. And, are you ready? Documented. If you project a cost of $250 for each gumball machine, you better have documentation showing that's what they cost. If you guess and/or don’t provide this, then someone who knows how to analyze plans, will pick up the phone, call George the gumball machine maker and find out that the real cost is something different. Whoosh! There goes your plan into the non-edible garbage can.

Consultant's Tip

Whenever possible, start a business plan with the projections. The proper perspective is that the words support the projections. The projections often coerce the right words in the beginning and the words often point out minor things that should be included in the projections. It is this interplay back and forth that really forges a strong plan. For me at least, it’s often a right brain, left brain thing. I’m in one mind set doing the numbers and in a different mind set writing the words. For the reader, the validity of your projections starts with the words.

Just like in any good restaurant … a fine meal begins with the menu.

Hope this helps.

Kent Capener of Capener Consulting.

Editor's Note: If you're craving more hands-on help with business plan aspects, take a look at Kent's helpful book, How To Write Your Own Professional Business Plan. It's an all-encompassing "how-to" including eighty pages of answers. Click here for details...

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