How to make business plans that work
May 19, 2021
By Jerry Bellune
When an angel investor hired us to advise him on a proposed new newspaper, we took the plan to 3 publishers we knew.
Each one thought the plan was impractical and each gave different reasons.
We gave the investor the bad news and collected our appraisal fee.
When we were planning to start Lexington Publishing, we hired a former CEO to help us. After we crunched the numbers he made a sound suggestion.
“What if we are wrong about our projected costs?” he asked. “Why don’t we add 10% for contingencies we didn’t expect?”
Then he said, “What about our revenue projections? What if we aren’t able to make the level of sales we projected? Why don’t we take 10% off just in case?”
That was a 20% swing on our projected bottom line: 10% more for costs and 10% less for sales and revenues.
That meant we could begin making a profit in 10 rather than 8 months, not bad since most startups take longer.
The 10th month came and went and we were still in the red. We became concerned.
We thought we had been realistic. And in the 11th month we broke into the black.
In your own plans, be tough-minded.
Lower sales and raise cost projections.
We share such field-tested ideas and strategies in our book “Million Dollar Strategies of Maverick Entrepreneurs.” For a copy email [email protected].
Next: Always audit the books
