Start-up Business Planning

Starting a business is an exciting journey filled with many questions and decisions. At Baker CFO Advisory, we understand the myriad of considerations that aspiring entrepreneurs face: Will your idea serve a market need? How will you fund your venture? Should you dedicate yourself to your new business full-time or start part-time? When is the right time to hire employees? Will this business provide the lifestyle you desire? How do you manage practical tasks like product design and technology setup? Do you bootstrap, borrow, or seek investors, and how do you find the right financial partners?
These are essential questions every entrepreneur must answer. Owning a business can be a grind, transitioning from the excitement of launching to the daily realities of managing people, production, delivery, and more. When he was the head coach of the Florida Gators before moving on, Urban Meyer found the joy of coaching overshadowed by the grind of planning and memorizing playbooks.  Likewise business owners often discover that the day-to-day management can become challenging. It's important to maintain perspective and find something you're passionate about, acknowledging that not every moment will be easy or fulfilling.
One constant in our approach is understanding the finances. Whether developing a new business or evaluating an idea, we always build a financial model with key drivers to tell the financial story, supplementing your vision when engaging with stakeholders.

Key Financial Drivers

Key drivers vary for each business but typically include:

• Number of Customers: Estimating your target market size and the number of potential customers is crucial.
• Pricing: Determining how much you can charge for your product or service.
• Costs: This includes research and development, sales, inventory management, overhead, staffing, and benefits.
• Owner Compensation: Ensuring the business can support your desired income.
• Capital Requirements: Understanding the necessary capital to start and sustain the business.
• Cash Flow and Liquidity: Managing the flow of cash in and out of the business to ensure liquidity.
• Borrowing Costs and Investor Infusions: Evaluating the cost of borrowing and the impact of investor funding.
  
•  Tax Implications: Considering how taxes will affect your business finances.

A robust model based on these drivers helps quantify goals, track progress, plan cash flow, and determine when strategic pivots are necessary.

Comprehensive Financial Modeling


We often see overly simplistic models focused only on income and revenue. A comprehensive business model should reflect the entire financial picture, including capital costs, liquidity, inventory financing, and investor contributions, related to the balance sheet. Creating multiple versions to reflect different scenarios can also be beneficial.

Transitioning to Budgeting

As your business progresses, initial modeling transitions into budgeting. Assumptions and estimates become tangible, revealing the true nature of running your business. Continuous forecasting, especially during high growth stages, becomes crucial to project cash flows accurately. Over time, your assumptions will be based on actual performance, enhancing the reliability of your projections.

Maintaining Perspective

Revel in the excitement of starting a business and pursuing your dream. Remember that while the journey can be challenging, keeping perspective and focusing on your passion can help you navigate the grind. Not every moment will be easy, but a solid financial foundation and strategic planning can significantly contribute to your business's success.