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You need to block off four hours. Block it off all at once. Just rip the band aid off. Don’t do 15 minutes at a time as long as good. Just block it all off
cause it’s mad.
Hi, thanks for joining us for another episode of ask spill CPA. Today we’re talking about the four hour business plan, so Evanton CPA, spurling associates. So we’re talking about the four hour business plan. I have coal here with me again, so cold. I think we see clients, I get a little overwhelmed when you say business plan to them the first time it’s been like 40 hours on it and try and make a work of art. Yeah, it’s a, it’s a working document. We’re going to make it the you do the best job possible. You’re going to change it next year for sure. In a small business. So the quote that we have here, I was a good visit. Planning quote Benjamin Franklin. If you fail to plan, you are planning to fail. Benjamin Franklin. Again, if you fail to plan you by default you are applying to fail. A Palo Alto software manufacturer.
They’ve run the stats on this, they know that business owners who complete a plan or actually 50% more likely to increase the size of their business, then business owners who don’t complete a plan. So we have 50% more likely to increase the size of your business by completing a business plan. Um, the story that we have here is we have business owners and they know a plan. It would increase their chances of success. They’re sold on that. But where they’re struggling is to find the time for what seems like an overwhelming task of his business plan where, Oh, maybe they, they’ve never done anything like it before. Um, or it seems daunting. Um, so cold water, the questions that these business owners should be asking, how many meetings in the spring and associates planning process normally take? So we actually, you know, straight from financial plan to visit that we actually can normally get a financial plan including a tax plan and business plan out the door.
Usually for meetings with the client. It’s not a huge process. We were very systematic way when meet with them once, twice, three times, four times, and we’ve got a financial plan, we’ve got a business plan and you’re on your way. Uh, you got a good working plan that it was going to guide the direction of your business for the next year. What normally happens in each of these meetings? So meaning number one is normally we’re going through their personal circumstances. And one of the mistakes that we make in business planning, especially small business planning, is, you know, people try to make a business plan that’s completely disconnected from what’s going on in the household. How much money did you take out of the business? You know, what, you know, what’s their debt level, what assets do they have like contributed the visit? It’s gotta make sense of what’s going in and the household.
So first meeting, number one is to find out, you know, what’s going on. We tackle that financial planning, tax planning first. And that first meeting is all designed to boat figuring out what are the household circumstances. You know, what’s the, the car payments, the debt levels, the income from other sources. Um, what are your high level objectives that they have bringing on family members, taking time off, selling the business, buying a new business, buying new houses. Let’s figure out what’s going on in that household first. And that’s meeting number one. Meeting number two is usually we’ve run our numbers on the household and we know exactly what we’re going to do from a tax planning perspective and a financial planning perspective. We deliver that financial plan and review it with the owners so they know in what circumstances they’re also meeting. Number two, we introduce them to our business plan template and then they get a little homework after a meeting, number two, and it’d be in between meeting number, um, you know, two and three is they put their vision for the business and our, on our planning template meeting number three is all about that business loan.
And they come back into our office and you know, we look at what they’ve written down, what they brainstormed and with this document and we try to understand their vision. You know, what are these guys trying to accomplish with the business? What makes them unique, what makes them special? Um, you know, what’s their vision for the business and then in between meeting up three in meeting number four, we’re going to put our spin on that vision to, you know, what recommendations can we put along with that vision that we think is going to put them in the best position to succeed on executing that vision in their business. And that’s being number four. When we get straight to the planning process normally in for meetings, sometimes it can be a little shorter. If people have done a bunch of legwork beforehand, sometimes they’re really disorganized and it takes a couple more meetings.
That’s okay. The key is getting a useful plan out the door that we think is going to increase their chances of success. How much time does the business don’t want or need to spend on the plan on their own. We tell them, hey, four hours, you don’t, we’re doing everything we used to do in those meetings really in between meeting two and three is, you know, you needed to block off four hours and block it off all at once. Just rip the bandaid off. Don’t do 15 minutes at a time. It’s not as good. Just block it all off and you’re really just good and dump your vision for the business in there in those four hours and really in between meeting two and three, that’s all you need to do. You’ll get a good effect of plant out of those four hours. Is that good idea to spread out these meters?
I think so. Um, I think it’s better to actually spread these meetings out. Normally our default setting as we do one meeting a month, you know, for four months till we got all the planning ironed out. And I actually think it allows people to think critically about it. Usually if we’re, we can generate a client quicker, but normally we’re doing that because of external pressures. Um, we’re doing it because the bank won’t give you the financing until they see the plan. That’s the case. I guess we’re cranking out faster. Sometimes the plan tends to be more geared towards what the bank wants them, what’s actually going to buy the business owner in those circumstances. It’s a better idea. Um, you know, I believe to, to actually spread that out there. There’s no reason why you can’t start your business and we develop your plan and you got to stop thinking about your plan is something that gets done before you start and never done again. It’s something that you do every single year, so it’s always something you’re going to be doing while you’re running your business and you know, having a couple of months of experience while you’re running your business while you’re still working on your plan, in my view is it’s actually not a bad ideal. You’d probably get a better plan out of it.
Do Business owners sometime think that a business plan is a sales mark? Is sales material?
Did you yeah. So they think, hey look, I got this business plan. I better make this Polish just with all kinds of language. It’s going to impress the customers. Like the customer never sees your business find this is just for you. This is, you know, sometimes it’s going for the bank but uh, is going to the bank too. But you know, for the most part this is plan is designed to keep the business owner focused on their own vision. We don’t have to, you know, dress it up. Uh, it just got to be, you know, straight to the point what we’re going to do, what we’re going to not do, which is just as important so you don’t have to worry about making it. It’s not like making a flyer or something on your website that everyone is going to see. This is just for you. This is just to keep your goals focus. It’s to communicate to us what the vision is and then to help us, you know, give us enough information that we can give you recommendations on how to execute that vision.
Why do you think four hours per year on planning is better than 40 hours in one year?
So you learn so much every year that you operate your business. You’re going to be so much smarter in year two than you were in here. One, you just won’t have the perfect plan and you one, I think there’s a law of diminishing returns on how much you spend on that plan. I think that that time spent in our office, that those meetings and that four hours is the average visual learner can put their vision for their business in the plan. I think it’s highly beneficial and as a huge payback on that amount of time, but remember we only have 168 hours in the week. It’s 40 hours going to make you better just because you spent more time. You probably don’t even know what you’re talking about when you first start because you just started the business. That’s okay. You know you’ll you know a little bit, but you’re going to know so much more.
In year two, you’re going to know more again in year three. So if you’re constantly looking at it that this is a no, this is my annual checkup and I’m going to use what I learn each and every year to get better and better and better and make my plan more focused. You’re just going to completely over on the person who thinks that they could do at once. At the beginning it’d be perfect at it. Why is finding issues with your plan a lot like finding your missing keys. So it’s like, you know, misplaced your car keys and you just can’t find your car keys from life and then someone else looks at like seven 40 and the rate on the table and you just couldn’t see it. It was, it was sitting there right in front of, you know, uh, you know, trying to find issues with your own business plan sometimes is very, very difficult.
Having someone else involved and ideally a CPA involved is probably the, the best practice because it is very difficult sometimes to see the most obvious issues cause you’re so close to it. Um, and also a lot of times the experience that you have is just related to your industry and someone else can take experience from other industries and actually apply it and that you gives you something unique that you can execute in your business that some of your might not be doing. This Berlin associates have more than one person look at the plan. So even honestly, we have a business loan and do the plant and we never have just one person look at the plant because it doesn’t matter if I do all the plans with myself, I won’t get to the, you know, as good of a conclusion. I won’t have a, uh, you know, the same quality and same amount of input as we can as we have several team members.
So we were always have at least two team members look at the planning and sometimes more. And it just gives more input in that business or in what circumstances have we encountered, um, myself and the other team members, um, that we can, you know, in part on this business owner to help them, you know, put them down the right path. And give them advantages of people who have been there before did, didn’t have, right. Uh, you know, if you, if you want to see further that he has is that you, you stand on the shoulders of others and then you could just see so much further. Um, you know, that’s why you want to have more than one person look at it. Are doing financial projections difficult for even CPAs? Yeah, it’s a, if you look at a re, uh, a newer CPA and sometimes look at them doing a forecasting model and you look at their cashflow projections, it’s a very, it’s a tough task.
Um, you know, it’s a task to ask someone to get 100% on it. Um, whether you’re a rookie or your experience, it’s, uh, difficult. So where this ties in is, you know, you gotta think that professional CPAs have gone to school for seven years. It’s not outrageous for if they’re doing this task alone to make, um, an error themselves. So now you get the average business owner who hasn’t had, you know, seven years of professional training and they’re trying to do cashflow projections. And I, I’ll, I’ll say a stat out there is that when business owners do cashflow projections on their business plan, they’re not wrong. 99% of the time, they’re wrong 100% of the time. I’ve never seen, you know, over a decade and public practice, I’ve never seen a cashflow projection come in from a business owner. And it’s right, it’s 100% right. I just, it’s just never happened.
Um, so, you know, we would have remember that when you, the projection part of it, uh, that’s really difficult. Um, even for CPAS, even if you can’t afford a CPA, should you do the projections yourself? Yeah. I still think even if you couldn’t afford to do the CPA and say this was a side hustle, I think you should dump the vision for the planet in there and let someone else take the first hack at doing the projections because the projections that someone else comes up with the, you’re going to learn something. And if you don’t prejudice them with your own projections first you might learn something that, you know, I guess I thought it it this way, but that might be a little too aggressive. We want to plan on generally on the more conservative side because if you run out of cash, I guess what it’s usually game over or sometimes for a lot of business owners.
So even if you couldn’t afford to hire a CPA, I was strongly recommend hiring a CPA for any main business, uh, any significant amounts. But it is say if this was a side hustle and he just wanted to do on the cheap, um, rather than do the production yourself, I would get someone else to do the projection for you. You, you’d explain to them the vision. You would explain to them, you know, the write out the rest of the parts of the, the business plan and they give it to them and say, Hey, can you do me an income statement projection? Can you do me a cashflow projection? You want to see what they come up with first? You can always change it after a while. They come up with. Um, but I think you would learn a lot in terms of, you know, what might be overly aggressive that you were expecting, what someone else would expect. So I think that’s what we have here today. Thanks so much for tuning in. As always, we look forward to any comments that you have in responding to your comments and, and, uh, you know, finding out what you guys would like to address in future videos. As always, please hit that like, and subscribe buttons so we can continue to deliver you tips on how to beat the odds of business. Thanks very much.
