The Business Plan – Financial Analysis & Projections, Expenses

The Financial Analysis is quite important.  If you are applying for a business loan it could be the most critical section of all, as these estimates will help determine if you are a good credit risk.    All projections must be based on historical and/or industry information – no “winging” it here!

This post will include projected start-up costs; income will be included in the next post.  Although I am not applying for a small business loan, I still treated this section as rigorously as if I were.  I researched how much the equipment I needed would cost and included the vendor name and item numbers.  I received actual web site design bids.  I used historical data for phone and email newsletter services.  I included accurate costing information for everything I could.

The only estimate that may be a little nebulous is that for my precious metal purchases – findings and raw material that will be incorporated in my work.  The precious metal market is in high flux, due to the economy.  There has been wide variation over the past several months, so I based my precious metal pricing on the market price at the time I put together my Business Plan.  I fully expect it will change and will price my finished goods accordingly.

Although the specific numbers I developed are only useful to my own business, here are the expense categories I used:

  • Initial Web Site Cost
  • Web Hosting & Web Upkeep
  • Logo Design
  • Business Papers
  • Copyright/Trademark Registration
  • Packaging
  • Credit Card Processing
  • Email Newsletter Service
  • Other Marketing Costs
  • Professional Services – accountant., consultant
  • Phone
  • Office supplies
  • Studio Equipment – one time purchases
  • Studio Consumables – sandpaper, mold material, etc.
  • Precious Metal Consumables – becomes an intrinsic part of jewelry.
  • Non-Precious Metal Consumables – becomes an intrinsic part of jewelry.

If you see something I may have forgotten, please let me know in a comment.  As I said in a previous post, the Business Plan is a living, breathing document and subject to change.

Next:  The Business Plan – Financial Analysis & Projections, INCOME!

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3 Responses to The Business Plan – Financial Analysis & Projections, Expenses

  1. Fauxology April 13, 2009 at 10:38 am #

    Maria – great organization! When we put our real business plan together (not just ideas of what we wanted to do), it took us about a month of research and deep thinking. You are going in a great direction. What about electricity, water, studio space — even if at home? That’s all I can think of offhand. I love handcrafted jewelry (it’s all I buy). Can’t wait to see your full line soon!

  2. Maria April 13, 2009 at 12:15 pm #

    I have spoken to several accountants and all advised against taking the home office deductions. The immediate savings are minimal, especially when compared to the negative impact when the house is eventually sold.

    As for utilities, I will be fine-tuning this year and will speak to my accountant about the best way to add those in for next year. I need to track my overall use of utilities this year. The business phone line is the only office/studio expense I deduct at this time – it’s the easiest, since it is a dedicated line – no fussing with percentages!

    Thanks for stopping by 🙂

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