Saturday, January 19, 2013

Privley's Top Ten Business Plan Mistakes


PRIVILEY'S TOP 10 & MOST COMMON BUSINESS PLAN MISTAKES FOR 2013:

 

Priviley Business Plan Logo
The Basic Flow of Business Plans...

 

A GOOD BUSINESS 
PLAN FOLLOWS 
GENERALLY ACCEPTED GUIDELINES FOR 
BOTH FORM 
AND CONTENT. 






A business plan is a written description of your business’s future. That’s all there is to it—a document that describes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope or bar napkin describing your business strategy, you’ve written a plan, or at least the germ of a plan... 

Here are some of the most common mistakes or pitfalls that entrepreneurs fall into when they are tasked with writing a business plan. Constructing a business plan is not as difficult or daunting as it first appears, but hiring a consultant or professional to assist in your business plan preparation is paramount. One does not want to loose potential investors or SBA funding due to improper formatting or missing information!
 
MISUNDERSTANDING THE PURPOSE: IT’S THE PLANNING THAT MATTERS, NOT JUST THE DOCUMENT.  
Planning is a process of setting goals and establishing specific measures of progress, then tracking your progress and following up with course corrections. The plan itself is just the first step; it is reviewed and revised often. 

DOING IT IN ONE BIG PUSH; INSTEAD, DO IT IN PIECES AND STEPS. 
 The plan is a set of connected modules, like blocks. Start anywhere and get going. Do the part that interests you most, or the part that provides the most immediate benefit. 

FINISHING YOUR PLAN.  
If your plan is done, then your business is done. That most recent version is just a snapshot of what the plan was then. 

HIDING YOUR PLAN FROM YOUR TEAM.
 It’s a management tool. Use common sense about what you share with everybody on your team. But do share the goals and measurements, us- ing the planning to build team spirit and peer collaboration. 

CONFUSING CASH WITH PROFITS.  
There’s a huge difference between the two. Waiting for customers to pay can cripple your financial situation without affecting your profits. Load- ing your inventory absorbs money without changing profits. You don’t pay your bills with profits. 

DILUTING YOUR PRIORITIES. 
 A plan that stresses three or four priorities is a plan with focus and power. A plan that lists 20 priorities doesn’t really have any. 

OVERVALUING THE BUSINESS IDEA.  
What gives an idea value isn’t the idea itself but the business that’s built on it. Either write a business plan that shows you building a business around that great idea, or forget it. 

FUDGING THE DETAILS IN THE FIRST 12 MONTHS.  
By details, we mean your financials, milestones, responsibilities and deadlines. Cash flow is most important, but you also need lots of details when it comes to assigning tasks to people, setting dates and specifying what’s supposed to happen and who’s supposed to make it happen. 

SWEATING THE DETAILS FOR THE LATER YEARS.  
As important as monthly details are in the beginning, they become a waste of time later on. How can you project monthly cash flow three years from now when your sales forecast is so uncertain? Sure, you can plan in five, 10 or even 20-year horizons in the major conceptual text, but you can’t plan in monthly detail past the first year. 

MAKING ABSURD FORECASTS.  
Nobody believes absurdly high ”hockey stick” sales projections. And forecasting unusually high profitability usually means you don’t have a realistic understanding of expenses. 

Thursday, January 10, 2013

US Treasury Unable To Pay Bills & Tax Refunds Beginning February 2013

US Treasury
United States Department of the Treasury
The United States will no longer be able to pay all its bills sometime between Feb. 15 and March 1, according to a new analysis from the Bipartisan Policy Center that I came across this morning...

Their research shows that the US has less time to solve this problem than many realize and shows an earlier cash depletion or shortfall. Steve Bell pointed this out in an analysis he did January 7.



Will we see "Obama Bonds" in 2013?
The factors that will decide the actual date include the strength of the economy, which determines the amount of tax revenue the government brings in, and the timing of tax filings and refunds. The government hit its legal debt limit on Dec. 31 and has since relied on extraordinary measures to fund its obligations and operations. (Anyone hear about President Obama's Trillion-dollar platinum Treasury coin idea...?!? Perhaps the Treasury will issue "Obama Bonds" to refinance the $16-trillion national debt in lieu of raising the debt limit or coming to a budgetary agreement? Yikes...

If the Treasury runs out of money, it might either choose which bills to pay or pay entire days' worth of bills at a time once enough cash is available. I suppose they will do some fancy accounts payable "net 30" terms shuffling...I wonder if that will ultimately delay tax refunds? Or perhaps the treasury will throw darts or flip coins to determine which refunds they will pay first...if at all?

Decision Chicken
Southpark's Margaritaville "Decision" Chicken
Perhaps they will follow the idea in Southpark's "Margaritaville" episode where Stan questions the US Treasury and demands answers. The three Treasury Agents say they have to "consult the charts". Stan follows the men inside. He sees a round lit-up game show style board. The men cut off a chicken's head and let the decapitated chicken run on the board while one of them plays a tune comparable to Yakety Sax on a kazoo. The chicken falls on the "bailout!" spot, so that is what the men do. I wonder if the Treasury will use that method to choose which bills and/or tax refunds to pay...

The first scenario is unprecedented, and its legality is unclear, the BPC analysis report says. The design of the Treasury's computer systems also might not allow for it. (See my aforementioned dart/coin-flip suggestion...)

And if Treasury did attempt to pay its bills selectively--BPC says it could afford 60 percent of what it owes from Feb. 15 to March 15--it would have to sort through more than 100 million monthly payments.

For that month, the Treasury could afford to pay the interest on its debt, tax refunds for individuals (what about corporations, partnerships, and/or small business??!!??), Medicare and Medicaid payments, social security benefits, military pay and retirement, and unemployment benefits. But in that case, the government wouldn't be able to pay its defense vendors (GREAT!--sarcasm--), veterans benefits, federal salaries and benefits (WONDERFUL!--sarcasm--), food stamps, or really anything else for that matter.

The cash flow analysis estimates that on Feb. 15 alone, the Treasury will bring in $9 billion in revenue and owe $52 billion in spending, including $30 billion in interest on the national debt.

Photo Credit Netrightdaily.com 2012
The report also predicts chaos and public uproar would ensue if Treasury ends up deciding which of its obligations to continue to fund. Wow, for once the US Government is being forced to operate within cash-flow confines of normal or most businesses (large or small) in the world! No more blank checks or unlimited cash in the vault... And by the way, your credit is maxed-out! Welcome to the real world. Who's going to bail you out?

Wednesday, January 9, 2013

DoD should ponder cause and effect

US DoD Logo
United States Department of Defense Logo
Defense Department directives should mandate an analysis of unintended changes to the political landscape of a country that a security force enters before the force is deployed... At least the Government Accountability Office, "GAO", seemingly agrees with me.

In a Nov. 30 presentation to the House Committee on Armed Services, reproduced in a Jan. 8 report, GAO says the DoD already has guidance for considering unintended consequences and moral hazards when developing a security force, but needs a specific policy obligating such consideration. In my experience, such enforcement is apparently selective.

A moral hazard is when security force assistance causes a country or its leaders to behave as if they were protected from the consequences of their actions--such as undertaking new oppression of citizens or military aggression against neighbors that would not happen a without security force presence.

In three joint doctrine publications, DoD outlines concerns for security force operations that support nation building and protect a society from insurgency, lawlessness and subversion.

Some input from the State Department is required by law and tied to the funding of security forces, but GAO suggests that DoD also update relevant directives to incorporate unintended risk considerations at similar levels regardless of the legal requirement.

The Afghan Security Forces and Coalition Support funds legally require concurrence from the secretary of state and are reviewed by the department's relevant experts and bureaus, which the report says gives these funds the best chance for identifying potential unintended consequences.

Counterdrug support funds for other nations legally requires a consultation, but GAO says this standard is vague and these actions typically do not receive the same level of review as those that require concurrence.