So you have and amazing idea or ideas that you would like to make a reality. That’s great! You have taken the first important step to financial independence! Now it´s time for the slightly more consuming part, doing the numbers for your business and developing your business plan.
It may be useful to actually define what I mean in this context of doing the numbers. It means building out a financial model for your business the, most important parts of which being the income statement and the most important aspect of that, the revenue and variable costs of the business.
Why is it important to do the numbers for your new idea?
- Without execution or planning your idea is currently worth $0.
You will not convince anyone to contribute to your idea without some kind of well thought out plan that demonstrates your unique knowledge of the market and situation.
Building a well thought out business plan doesn’t take a lot of money, but it can take a bit of time collating all the right information together. This time you invest into developing the idea actually has some value. It is a small barrier to entry that your competitors would have to do also.
- It forces you to ask the right questions
Doing the numbers for your business plan makes you think of the core issues to solve in order to make your idea a reality. There have been many times I have spoken to clients and have within 20 minutes realized that the idea is not viable in it’s current form usually due to the immense amount of capital required in a limited market space.
In the business world they call this due diligence and market research – highlighting the most important items to address. For the purposes of explanation we will be some of the first questions you will need to ask specifically defining the costs (both variable & fixed) that you will need
• How much will I need to invest initially?
• What is the variable cost of producing each plate?
• What are the fixed costs? (Rent, Employees, Public Services, Internet)
• What kind of returns will my investors require for this type of business at this stage of it’s development?
- Positions you well for the next big steps
Doing the numbers for your business plan makes you think of the core problems to solve of your business in order to make it a reality. It guides you down your path of due diligence and market research – highlighting the most important items to address. For the purposes of explanation we will be some of the first questions you will need to ask (in this example I will use an example of a fast food Indian food restaurant in Bogota Colombia):
- Business Plan:
Doing the numbers puts you in a good position to finally put all that hard word work and research into a business plan. The business plan does not need to be a long complicated document at this stage of idea development; it doesn’t need to be beautiful or formatted incredibly. This document is for you
I will be uploading an example in my free library on the dothenumbers.co website shortly, which you will be able to access via your free subscription. However if you need a version NOW, send me a message and I will send it through. firstname.lastname@example.org
- Build a team:
It could be that you don’t have certain skills or experience necessary to execute on your idea. You can use your idea evaluation spreadsheet to attract the people you need to assist you.
- Sourcing Initial Investment:
It could be that by yourself you do not have sufficient cash by yourself to start the new venture. At this early stage of your start up you should approach friends & family who maybe able to help you. In this early stage, a lot of trust is required by the initial (angel) investors in the entrepreneur. Unless you have a proven track record, these will mostly likely be the only sources of funds available.
- Business Plan:
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You can use your FREE Idea Evaluation Spreadsheet to explain your idea in detail.
- Build out your Income Statement, Cash Flow Statement & Valuation Calculation (Pre & Post Money).
- Highlight their potential returns as one of the first investors.
- Identify the risks.
- Demonstrate your knowledge of the sector.