8 Ways to Optimize your Business Plan’s Financial Projections

8 Ways to Optimize your Business Plan’s Financial Projections

 

LUTZ BUSINESS INSIGHTS

 

OPTIMIZE YOUR BUSINESS PLAN'S FINANCIAL PROJECTIONS

8 ways to optimize your business plan’s finanical Projections

SCOTT milleR, client accounting services director

 

You need a business plan for three primary reasons:

  • To show to bankers and potential investors
  • To better understand your existing business structure
  • To do short- and long-term strategic planning

Effective business plans contain multiple text documents, but it’s the financials—those charts and graphs and tables—that will jump out at potential loan approvers and investors. They’re also useful to you as you continuously assess your company’s financial growth.

Three reports are always included: Income Statement (Profit & Loss), Cash Flow Statement, and Balance Sheet. Some business plans offer additional ones, like a sales forecast and expense budget. These grow out of your assumptions, a lengthy list of questions you must answer, like:

  • How many units will you sell each month?
  • How much will you spend on marketing in the first 12 months?
  • What do you have currently in assets? Liabilities?

How can you make your projections realistic while displaying your company’s strength in the best possible light?  Here are some suggestions.

1. Start with historical data

Unless you’re just launching your business, you have existing data you can use for reference as you’re creating your projections. If you’re already using QuickBooks, this will be a lot easier.

2. Look at examples

If you’re a new company and don’t have historical data, this will be difficult, as privately-held small and midsized companies generally don’t disclose their financials. You can still do market and industry research online for information that’s available to the public.

3. Broaden your knowledge

Think beyond the confines of your own company and even your surrounding geographical area. Pay close attention to what’s happening on the national level. What’s happening with the economy that might affect your industry? As economists make predictions, consider what impact they might have on you.

4. Include multiple years

You might make your first-year projections monthly and include a lot of detail. For the next 2-4 years, you could use annual figures.

5. Consider creating two sets of financial projections

You could build projections for both worst- and best-case scenarios.

6. Be realistic but optimistic

Don’t inflate your numbers. The trained eyes of investors and bankers will know when the outlook is too rosy. And it won’t help you do your own internal planning if you’re overestimating your company’s potential. On the other hand, don’t low-ball yourself. You want to look like an attractive prospect to outsiders, and you want you and your staff to be challenged. It’s a delicate balance.

7. Get company-wide input

If your business is big enough to have multiple employees or even departments, get them involved in the process, just as you do when you’re preparing a budget. Your staff may have knowledge and insight in areas that you don’t.

8. Keep it simple

Financial projections are very, very complex. Make sure, though, that they’re clear and easily understood.

The mechanics of creating financial projections can be daunting, especially if you haven’t worked with spreadsheets or accounting software. We have extensive experience here, and we can help you take on this difficult but necessary process. Contact us, and we’ll help you get started.

ABOUT THE AUTHOR

402.827.2036

smiller@lutz.us

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SCOTT MILLER + CLIENT ACCOUNTING SERVICES DIRECTOR 

Scott Miller is a Client Accounting Services Director at Lutz with over 16 years of related experience. He specializes in business consulting for closely held companies and outsourced accounting replacement services.

AREAS OF FOCUS
  • Outsourced Accounting Replacement Services
  • Business Consulting
  • Operational Analysis
  • Provider Compensation
  • Budgeting
  • Financial Benchmarking
  • Strategic Planning
  • Professional Services Industry
  • Private Practice Healthcare Industry
  • Dental Practices
  • Construction Industry
  • Restaurant Industry
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, University of Nebraska, Kearney, NE
COMMUNITY SERVICE
  • Creighton Prep Alumni Board of Trustees, Past Member
  • Ridgefield Homeowners Association, Treasurer
  • Omaha Suburban Baseball Association, Board Member

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Shovel-Ready Capital Recovery & Investment Act for Nonprofit Organizations

Shovel-Ready Capital Recovery & Investment Act for Nonprofit Organizations

 

LUTZ BUSINESS INSIGHTS

 

SHOVEL-READY CAPITAL RECOVERY & INVESTMENT ACT FOR NONPROFIT ORGANIZATIONS

SHOVEL-READY CAPITAL RECOVERY AND INVESTMENT ACT FOR NONPROFIT ORGANIZATIONS

The Shovel-Ready Capital Recovery and Investment Act (LB566) is currently pending approval from the Nebraska Legislature. This bill, if passed, intends to provide grants to qualified nonprofit organizations to assist with capital projects that were delayed due to COVID-19 and that will deliver a positive economic impact in the State of Nebraska.

WHAT ORGANIZATIONS QUALIFY?

To qualify, a nonprofit must be exempt from federal income taxes under section 501(c)(3), and be related to arts, culture, humanities, or athletics.

HOW CAN I USE THE GRANT?

Grants can be applied to the costs of land, engineering, architectural planning, contract services, construction, materials, and equipment required to build, expand, or develop new or existing facilities.

HOW MUCH IS THE GRANT?

The amount of any grant approved under this section shall be equal to the amount of funds to be supplied by the qualified nonprofit organization from private sources, subject to the following limitations:

  • Capital projects with an estimated cost of less than $5 million, the grant will not exceed $1 million.
  • Capital projects with an estimated cost of $5-25 million, the grant will not exceed $5 million.
  • Capital projects with an estimated cost of $25-50 million, the grant will not exceed $10 million.
  • Capital projects with an estimated cost of over $50 million, the grant will not exceed $15 million.

HOW DO I RECEIVE THE GRANT?

Each qualified nonprofit organization that receives a grant under LB566 shall secure the private funds through a written pledge or payment by December 31, 2021, and must begin construction on the capital project by June 30, 2022. Any organization that fails to meet the requirements must repay the grant funds received.

HOW IS THE GRANT FUNDED?

As of this writing, the draft form of the bill intends to appropriate $25 million of general funds and $75 million of federal funds allocated to the State of Nebraska from the American Rescue Plan Act of 2021.

WHEN CAN I APPLY?

If LB566 passes into law, qualified nonprofit organizations may apply for the grant starting July 1, 2021, through July 15, 2021. Applications will be considered in the order in which they are received.

If you have any questions, please contact your Lutz Representative. You can also find more information on the bill here.

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12.4.2019 | Year-End Planning Strategies & Updates | Recording

12.4.2019 | Year-End Planning Strategies & Updates | Recording

 

LUTZ BUSINESS INSIGHTS

 

12.4.2019 | Year-End Tax Planning Strategies & Updates | Recording

Though there aren’t many days left in 2019, you still have time for a quick review of your financial situation. This seminar, led by Adam Austin, Steve Nebbia, and Justin Korth, covers current tax law updates as well as general year-end planning ideas.

RECENT POSTS

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3.30.21 | American Rescue Plan Act + How Will it Affect Me? | Recording

3.30.21 | American Rescue Plan Act + How Will it Affect Me? | Recording

 

LUTZ BUSINESS INSIGHTS

 

American Rescue Plan Act

3.30.21 | American Rescue Plan Act + How Will it Affect Me? | Recording

The American Rescue Plan Act, a $1.9 trillion economic stimulus bill recently passed by Congress, intends to speed up recovery from the recession brought on by the COVID-19 pandemic. This presentation will provide an overview of the American Rescue Plan Act and how it could affect businesses and individuals. In addition, Lutz experts will provide high-level updates on current programs such as PPP and more insight on the Employer Retention Credit (ERC).

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5 Reasons Your Business Needs an Expense Policy and How to Implement One

5 Reasons Your Business Needs an Expense Policy and How to Implement One

 

LUTZ BUSINESS INSIGHTS

 

5 REASONS YOUR BUSINESS NEEDS AN EXPENSE POLICY

5 reasons your business needs an expense policy and how to implement one

EMILY OLSEN, senior accountant

 

Do your employees know what’s expected of them in terms of the company money they can spend when they travel? If they don’t, you might:

  • End up with unnecessarily costly expense reports.
  • Risk exceeding projections in your current budget.
  • Alienate employees if you don’t reimburse them for everything.
  • Have more trouble with future budgeting and forecasting.

Finally, an expense policy can save time and keep things fair. It will allow you to approve reports faster, instead of guessing whether you approved a certain expense before or not.

For all those reasons, your company needs an expense policy. This should be a written document that lays out the expenses that employees can legitimately claim when they travel on behalf of your company. This is the best way to keep travel expenses down. If employees know ahead of time what the rules are, they’re less likely to spend freely.

What’s In An Expense Policy?

Your expense policy should define what constitutes business travel and who is eligible to claim expenses. You can describe your expectations here, too. For example, you may ask employees to economize as much as possible. What happens if they submit claims for expenses that don’t follow the policy? How long do they have to submit their reports and how quickly will they be reimbursed? What kind of documentation is required and how should this and the report itself be submitted?

You’ll want to put a dollar maximum on some of the items you list in the policy or limit expenses in other ways. For example, are employees ever allowed to fly business or first class? How much can they spend on dinner or for a hotel room? Consider also spelling out the rules on things like cash advances, vehicle mileage, cabs or rideshare services, and “add-on” flights. You might also list expenses that aren’t covered, like the mini-bar, hotel gym, and movie rentals.

Many unanticipated situations can come up during business trips. What do employees do if they encounter one? You’ll probably have to amend your document periodically to include new expense types.

Keep your expense policy as simple and accessible as you can. If it runs too long, employees are less likely to absorb it. You’ll need to build flexibility into it, since things cost more in some parts of the country than others.

Finding the Right Solution

How do you handle completed expense reports? Getting that data into your accounting system can require a lot of duplicate data entry if you’re doing your bookkeeping manually, and errors are likely. It’s easier if you’re using QuickBooks, and easier still if you add an integrated expense-reporting app. Some even help you manage approvals, check reports against policies, and handle reimbursement.

Contact us if you’re struggling with this financial issue. We can help you find the best way for your business to manage your expense policies and reports.

ABOUT THE AUTHOR

402.769.7040

emoore@lutz.us

EMILY OLSEN + SENIOR ACCOUNTANT

Emily Olsen is a Senior Accountant in the Client Accounting Services department at Lutz. She specializes in providing outsourced accounting services to clients with a focus on QuickBooks, tax and payroll compliance, small business consulting, as well as software implementation and training.

AREAS OF FOCUS
  • Client Accounting Services
  • QuickBooks
AFFILIATIONS AND CREDENTIALS
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • MAcc, University of Nebraska, Omaha, NE

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5 Things to Consider When Choosing a Payroll Processing Vendor

5 Things to Consider When Choosing a Payroll Processing Vendor

 

LUTZ BUSINESS INSIGHTS

 

5 THINGS TO CONSIDER WHEN CHOOSING A PAYROLL PROCESSING VENDOR

5 THINGS TO CONSIDER WHEN CHOOSING A PAYROLL PROCESSING VENDOR

ERIN BAAS, Client Accounting Services DIRECTOR

 

There is no element of running a small business that can be more complex than payroll processing. Furthermore, getting it wrong can be disastrous. Not only are your employees counting on you, but federal and state taxing agencies are watching you.

Outsourcing payroll processing to an outside provider can be a good solution. If you are considering that route, there are several things you should consider about vendors before choosing one.

 

1. How much will it cost compared to what I’m doing now?

This is probably the first thing that comes to mind, and the question has many components, including:

  • The price of doing your own payroll. What costs do you currently incur? If you are doing it manually, staff time accounts for much of it. If you have automated it, how much have you spent on hardware and software and staff time?
  • The price of penalties. Payroll errors are expensive, and they diminish trust. An inexperienced inhouse employee can be more prone to costly mistakes than a professional.
  • The price of outsourcing. Payroll service fees are all over the map. There may be a base fee plus an additional charge for each employee or one price per pay run or some other combination of charges. Are there other fees that you should learn about upfront?

 

2. What do you know about the vendor’s reputation?

There are payroll vendors that are household names in the industry. This popularity can speak to their reliability, but they tend to be some of the most expensive options. The bigger the vendor, the less likely you will get personalized customer service. If you are looking at a smaller vendor, make sure to do some investigating online to learn about their history and their level of client satisfaction. Do they have experts who can ensure that your payrolls and related HR requirements will be handled in compliance with state and federal regulations?

 

3. Will the vendor be able to accommodate you as your business expands?

Most vendors will tell you how many employees their services are able to handle. Keep this in mind as you consider how your company may grow.

 

4. How does the vendor handle communications with clients?

How do you report each payroll’s hours and other compensation and deductions? Will you be assigned a dedicated payroll expert or team who you can call or text or email with questions?

 

5. What are the vendor’s deadlines for pay runs?

Are they willing to do off-cycle payrolls when needed and is there a charge? What happens if you, or they, miss a deadline?

Our outsourced payroll services use innovative technology and payroll specialists who have many years of experience working with small businesses in numerous industries. Our staff gets to know who you are beyond salaries and hours and deductions, and we provide personalized, comprehensive service that you won’t find from vendors who only process payroll. We can even assist when you need to add or change your employee benefit plans, or when other areas of your business need attention. Contact us, and we will be happy to answer any questions you might have.

ABOUT THE AUTHOR

Erin Baas + Lutz CAS & Healthcare Manager

402.827.2045

ebaas@lutz.us

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ERIN BAAS + CAS DIRECTOR

Erin Baas is a Client Accounting Services Director at Lutz with over 15 years of experience. She provides business accounting and advisory services to a wide variety of industries with a special focus in private physician medical practices.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Nebraska Medical Group Management Association, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, Creighton University, Omaha, NE
COMMUNITY SERVICE
  • Nebraska Wildlife Rehab, Treasurer

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We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

About UsOur Team | Events | Careers | Locations

Toll-Free: 866.577.0780Privacy Policy | All Content © Lutz & Company, PC 2021