Rarely can a project move forward without a business plan. If it can’t show a profit on paper, then it’s probably not wise to proceed. Of course, many plans are just based on assumptions that have to be proven out before real analysis can take place. But, assumptions that can be challenged should find their way to a financial spreadsheet.
When it comes to creating a business on paper, many innovators simply subtract the cost to build a product in their garage minus what they think it should be sold, then multiply by a few million, thus retiring in just a few years. Wouldn’t that be great!
Using tools that produce simple and complex calculations, we are able to forecast potential profit margins, break-even analysis and cash flow projections that reveal the potential health of a company before it is formed. Major factors often overlooked including escalating insurance, taxes, turn rates, returns, shipping, fulfillment warehousing, distributer and wholesaler markup, employee benefits plus a host of other campfire favorites all must be considered if a new company is to be formed.