Break Even Point: The importance of sound bottom-up planning

Break-even point: The importance of sound bottom-up planning When planning a company, it is essential to determine the break-even point in order to check the profitability of the business idea. The break-even point is the point at which revenues cover costs and therefore neither profit nor loss is generated. This calculation is crucial to understand how much revenue must be generated for the company to survive. Why is bottom-up planning crucial? It is not enough to simply "roll the dice" and roughly estimate the break-even point. Rather, it is important to carry out sound bottom-up planning in order to develop a deep understanding of the operating business and its dynamics. All relevant cost factors should be taken into account in order to enable a realistic assessment of the break-even point. Calculating the break-even point turnover: In addition to including the entrepreneurial expenses (wage costs, production costs, etc.), calculating the break-even point requires taking into account various factors that are often forgotten, including: Amount of private living expenses Income tax repayments By comparing these expenses with the planned income, the break-even point can be determined. This calculation provides answers to important questions, such as: How high is the turnover that is needed to cover the fixed costs (maybe also your private fixed costs!)? How many products must at least be produced and sold to cover the fixed costs? The importance of the break-even calculation in the business plan: The break-even point is a decisive criterion for the profitability of a business idea. It is important for both the entrepreneur and potential investors to present this calculation clearly and plausibly in the business plan. Well-founded bottom-up planning makes it possible to realistically assess the profitability of the company and to identify potential risks at an early stage. Conclusion: Bottom-up planning is a crucial step in determining the break-even point and the profitability of a company. A thorough analysis of all relevant cost factors is essential to enable a realistic assessment of the break-even point and to identify potential risks at an early stage. By presenting a clear and plausible calculation in the business plan, entrepreneurs and investors can jointly assess the profitability of the business idea and make well-founded decisions.

Key business figures in the business plan: A guide to company valuation

Business indicators in the business plan: A guide to company valuation The use of indicators is crucial for evaluating companies in a comparable way. Business indicators are used to evaluate a company's performance and are therefore an essential part of a business plan. Why are business indicators important? In a business plan, all relevant indicators must be presented clearly and concisely so that the reader can form an informed opinion about the business idea. It is crucial to adapt the indicators depending on the target group, as banks, investors and business partners have different interests and requirements. Which business indicators belong in the business plan? The selection of business indicators depends on various factors such as industry, company size and type of business. The most important indicators that should be included in a business plan are: Capital structure and financing: Debt ratio: This indicator provides information about the ratio of debt to equity and shows the financial stability of the company. Acid ratio: This indicator measures the liquidity of a company and shows the extent to which short-term liabilities are covered by liquid assets. Investment ratio: This is about showing constant but sustainable growth through constant investments in relation to sales. Profitability: Return on Investment (ROI): The ROI shows the relationship between profit and capital employed and provides information about the profitability of an investment. Operating Profit Margin: This key figure indicates what percentage of sales remains as operating profit and shows the profitability of the operating business. Liquidity: Current Ratio: The current ratio compares short-term assets with short-term liabilities and shows the liquidity of the company. Quick Ratio: The quick ratio is a stricter form of the current ratio because it only takes into account liquid assets and short-term receivables and thus enables a more accurate assessment of liquidity. Cost structure: Labor cost ratio: This key figure shows the ratio of labor costs to sales and provides information about the efficiency of personnel expenses. Other cost items (eg OPEX; COGS) can be compared with sales or total costs to determine which factors have the greatest influence on the reduction in sales. The main aim here is to identify adjustments for possible cost savings. Why are these key figures important? The key figures mentioned are crucial for evaluating the financial health and performance of a company. They help to assess the stability, profitability and liquidity of a company and serve as a basis for business decisions. Ultimately, they are control tools for you as an entrepreneur. For the bank or other financing partners, they serve to increase transparency and show that you have a firm eye on your business. How are the key figures presented in the business plan? To ensure that readers can easily understand the business plan, it is advisable to list the key figures both in the text section and in a clear table. In addition, each key figure should be accompanied by a brief explanation of its meaning and calculation method. It is important not to simply list the key figures, but to evaluate them and comment on them in context. Support from experts: Our experts will be happy to help you create your business plan. Contact us for an individual offer and receive professional support in selecting and presenting the business key figures in your business plan.

Business plan for the bank: A guide to successful financing

Business plan for the bank: A guide to successful financing The path to self-employment requires careful preparation, especially in terms of financing. A professionally prepared business plan is crucial, whether it is for starting a new company, for growth phases, for bridging payment bottlenecks or for applying for funding. This article gives an overview of what is important when financing through a bank, what to look out for in bank meetings and how to optimally design the business plan for the bank. Financing through the bank or development institute: The capital requirement can be financed either through a loan from a bank or a low-interest loan from a development institute such as the KfW Bank. The term of the loan should not be longer than the useful life of the investments financed with it in order to avoid unnecessary costs due to longer interest payments. The amount of interest depends on the risk of the borrower and the collateral offered. Types of loan: Depending on the term, loans are divided into short, medium and long-term financing. Short-term loans include, for example, current account loans, supplier loans and bills of exchange. Medium and long-term loans, on the other hand, are used to finance fixed assets and long-term parts of current assets. Loan comparison and selection of bank: It is advisable to compare the interest rates and conditions of various banks in order to find the most favorable loan offers. In addition to traditional banks such as savings banks and commercial banks, development banks such as KfW Bank are also an option. However, most development banks work on the house bank principle, which means that loans must be applied for through your own bank. Preparation for the bank meeting: A carefully prepared business plan is the basis for a successful bank meeting. The bank checks various factors such as the business idea, profitability planning and the company's collateral. It is important to make the business plan clear and understandable and to tailor it to the needs and requirements of the bank. In our experience, what is crucial here is to present to the bank in a fundamentally plausible way how their abstract entrepreneurial idea is to be implemented in concrete terms. It is about bottom-up planning for the implementation of your entrepreneurial project. This is particularly important in the financial part of the business plan. Contents of the business plan for the bank: In addition to a summary and a detailed description of the business idea, a business plan for the bank should also include a market and competition analysis, financial planning and a SWOT analysis. Particular attention should be paid to the figures part of the business plan, which shows the company's financial development for the coming years. Support from a business plan specialist: An experienced business plan specialist can help to design the business plan optimally for the bank and maximize the chances of success in obtaining a loan. Professional business plan preparation ensures that all relevant information and figures are presented precisely and convincingly.

The appendix of a business plan: an important component for checking assumptions

The appendix of a business plan: an important component for checking assumptions Creating a business plan requires careful planning and structuring in order to convince potential investors or financing partners. An essential component of a professional business plan is the appendix, which contains additional information and documents to check and support the assumptions set out in the main part. As in all places in the business plan that we at Squared Away create, it is important that the abstract, entrepreneurial assumptions, i.e. your goals, are fundamentally justified. For the external Lisa, I have to make it very clear that you can achieve your goals and ambitions without any problems and with a clear strategic plan. The appendix plays the role here of providing supporting documents that underpin your core statements Contents of the appendix The appendix of a business plan contains a variety of information and documents that are not included in the main part of the plan, but are nevertheless important to deepen the understanding of the business idea and demonstrate the financial viability of the company. Here are some important elements that can be included in the appendix of a business plan: Planning calculations: Detailed calculations that allow the reader to understand your financial forecasts and plans, including sales forecasts, cost analyses and cash flow forecasts. Planning fundamentals: Technical information and documents that support the fundamentals of your business idea, such as product descriptions, production information and technical specifications. Contracts and draft contracts: All relevant contracts, offers and agreements related to your business venture, including supplier contracts, customer agreements and financing agreements. Evidence of the entrepreneur: CV of the entrepreneur or founding team members, references, qualifications, certificates and other evidence that proves the competence and experience of the founders. Permits and permits: All necessary permits, licenses and certificates required to operate your business, such as business registrations, concessions and confirmations of registration in professional registers. Expert opinions: Evaluations or opinions from professionals or experts on specific aspects of your business idea or business model that support the credibility and viability of your plan. Appendix Design To make the appendix clear and easily accessible, the documents should be carefully organized and numbered. A carefully prepared table of contents at the end of the main body of the business plan makes it easier for the reader to find and review the documents included in the appendix. Conclusion The appendix of a business plan is an essential part that provides additional information and documentation to verify and support the assumptions set out in the main body. By providing relevant documents and information in the appendix of your business plan, you can gain the trust of potential investors or financing partners and increase the credibility of your plan.

Creating a professional business plan

Creating a professional business plan Creating a business plan is a crucial step for any company, regardless of its size or industry. A well-thought-out business plan not only serves as a guide for company management, but also as an important basis for potential investors or financing partners. The business plan should be both the basis for presenting the abstract, entrepreneurial idea and the first step in the operational implementation of entrepreneurial ambitions. Here you can describe how you specifically intend to achieve your goals. Although there is no set standard for the structure of a business plan, there are certain elements that should be included in most business plans. Text part of the business plan The text part of a business plan is often the first impression that potential investors or financing partners get of your company. Therefore, it is important to make this part as detailed and convincing as possible. Here are some key elements that should be included in the text part of a business plan: Business idea and service offer: A clear and concise description of your business idea and the product or service you offer. Location description: Information about the location of your business and its advantages and potential challenges. Target audience and region: A detailed description of your target audience and the region in which your business will operate. Market analysis: An analysis of the market in which you will operate, including potential growth opportunities and threats. Competitive analysis: An assessment of your main competitors and their strengths and weaknesses in comparison to your business. Marketing plan: Your strategy for marketing your business and products or services, including advertising, sales and PR. Pricing: Information about your pricing strategy and the reasons for your pricing. Human resources planning: Your plans for recruiting and developing employees and organizing your workforce. Project structural data: Technical details about your product or service and information about your suppliers and manufacturers. Implementation roadmap: A timetable for implementing your business idea and achieving your goals. SWOT analysis: An analysis of your strengths, weaknesses, opportunities and threats in relation to your business and industry. Financial Section of Business Plan The financial section of a business plan is just as important as the text section and provides an overview of the financial aspects of your business. Here are some important elements that should be included in the financial section of a business plan: Investment plan / capital requirements plan: A detailed breakdown of the investments required to start or expand your business. Financing model: Information about how you will finance your business, including equity, debt, and potential investors. Amortization plan / interest plan: A forecast of the amortization rates and interest payments on any loans or credit you may take out. Operating expenses plan: A breakdown of your business's ongoing operating costs, including rent, salaries, insurance, and utilities. Sales forecast / sales plan: A forecast of your future sales on a monthly or annual basis. Gross profit calculation: A calculation of your business' gross profit based on your expected sales and associated costs. Planned income summary / profitability plan: An overview of your business's profitability, including a profit and loss statement and cash flow forecast. Minimum sales calculation: A calculation of the minimum sales your business needs to break even and make a profit. Cash flow plan: A forecast of your future cash flow based on your expected income and expenses. Additional business plan elements In addition to the above content, a professional business plan should also include a table of contents, an appendix and other supplementary information if necessary. If you need support in setting up and writing your business plan, we are happy to help. Just contact us and we will be happy to provide you with a quote tailored to your specific needs.

Why it is problematic to have business plans drawn up by tax consultants

Why it is problematic to have business plans prepared by tax advisors Preparing a business plan is a crucial step for any business, but when it comes to having this plan prepared by a tax advisor or tax consulting agency, there are several reasons why it can be problematic. Limited strategic view Tax advisors often have a very limited view of the strategic scope of a planned project. They tend to focus on their financial accounting view and therefore cannot adequately consider the planning levels of entrepreneurial activities. This often leads to a static and unappealing business plan that does not take into account all the important strategic aspects of the company. Lack of entrepreneurial mindset Another problem is the lack of entrepreneurial mindset when tax advisors prepare business plans. Often they plan backwards by deriving operational activities from the financial figures instead of starting from the operational activities and then assessing the financial impact. This approach results in the business plan not meeting the actual needs of the company and thus having no operational value for the entrepreneur. Lack of operational value of the business plan Another problem is that business plans prepared by tax advisors often have a very technical, convoluted character and seem more like an accounting course than an entrepreneurial planning document. This means that the business plan has no operational value for the entrepreneur and thus does not function as an operational tool in the implementation of an entrepreneurial idea. Overall, it is important to understand that business plans prepared by tax advisors often do not meet the requirements and needs of the company. A well-thought-out business plan should not only take financial aspects into account, but also adopt a holistic and entrepreneurial mindset to ensure the success of the company. If a business plan does not meet the actual requirements of the company, it cannot effectively contribute to achieving the company's goals and thus cannot offer any real added value. For this reason, it is important that entrepreneurs apply a holistic and entrepreneurial mindset when preparing their business plans or turn to experts who have this mindset and understand the needs of the company.

Why is a professional financial plan crucial to the success of my business?

Why is a professional financial plan crucial to the success of my company? In the world of entrepreneurship, a solid financial plan is an indispensable tool that can make the difference between success and failure. A professionally prepared financial plan fulfills two essential functions: the operational function and the use for financing or capital increases. But why is a financial plan so crucial to the success of a company? Operational function of a financial plan A financial plan is not just a document for external investors or financial institutions; it also serves internally as an important control tool for management. By creating a financial model, clearly defined assumptions are made about the future development of the company. These assumptions serve as a basis for setting operational goals and monitoring the company's performance. Every financial model contains key performance indicators (KPIs) in the output, such as sales, which can be used to measure the company's performance and ensure that it stays on track. Financing needs and capital increases A professional financial plan becomes particularly important when it comes to securing financing or capital increases. Investors and banks always want to understand how a company will develop in the future and what assumptions underlie these forecasts. A detailed financial model provides this information and offers a clear insight into the company's financial health and future viability. It serves as the basis for decision-making and plays a key role in gaining the trust of potential investors. Necessity even for established companies Even for companies that are already established, a financial plan remains crucial. Such a plan makes it possible to present and vary the company's future development on the basis of clearly defined assumptions. By simulating different scenarios, the effects of potential changes in the operational business on the financial result can be analyzed and assessed. Individuality and uniqueness Another important aspect is that every business plan and financial model is unique and should be individually tailored to the needs and characteristics of the respective company. A professionally created financial model takes into account the company's specific drivers, such as sales and cost assumptions, and shows the connection between these factors. In addition, the results are presented in a clear and attractive manner to enable clear strategic and operational financial planning. Conclusion A professional financial plan is an indispensable tool for the success of every company. It not only serves as a control tool for management, but is also crucial for securing financing and capital increases. Even established companies should not do without an up-to-date and well-thought-out financial plan in order to plan their future development and identify potential opportunities. An individually designed financial plan provides the basis for successful strategic and operational financial planning and makes a significant contribution to securing the long-term competitiveness and profitability of the company.

The importance of a business plan for the success of your company

The Importance of a Business Plan to the Success of Your Business In the world of entrepreneurship, a business plan is an indispensable tool that can significantly impact the success of a business. At its core, the business plan serves as a structured document that outlines the implementation of a business idea and provides a clear roadmap to both internal and external stakeholders. Here are some key reasons why creating a business plan is crucial: Strategic management tool: A business plan acts as a strategic management tool and provides a guide to the founders as well as the management team for the implementation of a particular business idea. It defines goals, sets strategies, and ensures that all parties involved are working towards the same goal. Presentation to external partners: In addition, the business plan serves as a professional presentation of the idea to external partners, especially potential investors and lenders. It highlights how the business is planned and what potential opportunities it offers to attract the interest of financing partners. Versatile applications: The business plan has versatile applications and can also be used to present the business idea to potential business partners or new employees. It provides a clear and structured presentation of the planned implementation of an idea, which is essential for gaining support and trust. Planning and elaboration of ideas: In its capacity as a comprehensive document, the business plan enables detailed planning and elaboration of ideas. It helps to translate abstract concepts into concrete steps and to identify and overcome potential obstacles or challenges at an early stage. A business plan is therefore not just a formal document, but a living guide that paves the way for the success of a company. It is important that the business plan is drawn up carefully and professionally in order to achieve its full effect. For many entrepreneurs, it is therefore a wise decision to leave the creation of a business plan to external experts. If you want to have a business plan drawn up, you should choose an experienced and competent service provider who understands your vision and can present your goals clearly and convincingly. A well-thought-out business plan is an invaluable tool that can help you put your company on the road to success. In conclusion, a business plan is much more than just a document - it is a crucial tool for the success of your company. By carefully planning and presenting your business idea in a structured way, you can put your company on solid foundations and set the course for a successful future.

The importance of a business plan

The importance of a business plan A business plan serves as a strategic roadmap that not only shows the vision and goals of a company, but also describes in detail how these goals are to be achieved. It includes structured planning and is essential for accompanying new entrepreneurial projects from the idea to implementation. This applies to both start-ups and existing companies that want to take a new direction or expand. For existing companies, a business plan is a tool to show decision-makers how new ideas are implemented and what influence they can have on the existing business model. For start-ups, the business plan provides a structured overview of the company structure and serves as a means of communication with external parties, such as banks and funding institutions, to demonstrate the company's viability and development potential. Why you should have your business plan written Professionalism and expertise: Writing a business plan requires specific knowledge and experience. Professional business plan writers not only bring their expertise to the structuring and formulation, but also know how to present your business project in the best light. Objective evaluation: An outside service provider can provide an objective perspective on your business venture, highlighting strengths and identifying potential weaknesses that may be overlooked internally. Time saving: Creating a business plan is time-consuming. By outsourcing this process, you can focus on other important aspects of starting or running a business. Persuasiveness: A professionally prepared business plan increases your chances of convincing investors or lenders. It serves as your calling card, so it should be flawless and persuasive. Conclusion Creating a business plan is a crucial step in the success of your business. Investing in professional assistance in writing your business plan can make the difference between success and failure. A well-thought-out, professionally prepared business plan not only serves as a guide for your business, but also as a powerful tool for securing funding and gaining the trust of investors and partners. So, if you plan to take your entrepreneurship to the next level, you should seriously consider having your business plan written.