Creating a Business Plan Brian Cox 1/4/11 Nature is trying very hard to make us succeed, but nature...

Creating a Business Plan

Investools Discussion Group Helping People Invest Smartly

L a Gr o up

Brian Cox1/4/11

Nature is trying very hard to make us succeed, but nature does not depend on us. We are not the only experiment. - R. Buckminster Fuller

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Introduction

I’m a part-time trader and earn my living as an engineer.

There is likely some traders on this call who earn their living trading. I invite these professional traders to add their insights and if possible, share their business plans with the rest of the group.

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Introduction

A business plan needs to be a living document that you add to; change and update on a regular basis. It is not static.

Its a way to stay focused on the your trading.

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What is a business plan? A written document that describes a business, its

objectives, strategies, market and financial forecast.

A blueprint and communication tool for your business. A device to help you, the owner, set out how you intend to operate your business. A road map to tell others how you expect to get there

In a nutshell, the business plan should clearly explain the what, why, when, who and how of the project. It should be a comprehensive explanation of the opportunity, the people involved, the money required to implement the plan, where it will come from and what financial results the opportunity is likely to produce.

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Why do we as traders need one?

A business plan will guide us on achieving our goals

It can be a collection of spreadsheets, lists, research summaries, and other documents stuffed in a binder that you refer to and update on a regular basis

It enables budget expenses and helps in keeping control of expenditures, managing cash flow, measuring trading measuring success

It also ensures that money spent is not wasted.

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If you are expecting to use trading to add to your income, retire early, quit your job, then you need a business plan.

Then these may be your goals

How much will you need to make on a annually, monthly, weekly and daily

How are you going to create income; Stocks, Options, currency?

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Business Plan Elements

Mission Statement

Describe why you are building this business.

Are you adding income? Retiring early? Changing your profession? Something else?

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Simple Example Statements

This business has been developed to add to my retirement savings.

This business has been developed to pay for my child’s education

This business has been developed so that I can leave a profession that I no longer want to pursue

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More complete Example Statements I’ve developed this business so that I could leave my

profession.

I want to be able to spend more time with my family and my community.

Education is important to me and I will be sending the first of my two children to college within 4 years. I don’t want cost to be an issue.

Within 5 years, this business will fund the procurement of a vacation home.

I what to be able to participle in community and charity activities that I was not able to with my previous profession including, PBS fund drives, Red Cross activities and my children school activities

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Key points of a Mission Statement Be as specific as you can.

Personalize it to your goals for the business

Remember to put a time frame on it

If you are building it with a partner, then make sure that you both provide input and agree on it

Share it with others and use it as a means of communicating why you are spending time and energy on the task

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Key points of a Mission Statement

Skip Griffin has developed and excellent example:

http://bit.ly/skips-business-plan

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Funding / Working Capital

Where are you getting the money to fund the enterprise? Savings IRA Income from a job Loan

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What are your expenses? Weekly Monthly Quarterly Annually

Don’t forget, insurance, savings and taxes or benefits that you job currently cover

Can’t know how much you need to make if you don’t how much you are spending

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There are many tools that can help you to determine where your money is going.

I use Quicken to figure out my Mandatory as well as discretionary spending.

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Budget worksheets

http://financialplan.about.com/cs/budgeting/l/blbudget.htm

Household Budget Worksheet

http://xsprofits.com/Documents/budget_sheet_accc.xls

GRS Budget Worksheet

http://xsprofits.com/Documents/GRS-Budget-Sheet.xls

Personal budget spreadsheet

http://xsprofits.com/Documents/personal-budget-spreadsheet.xls

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Business Plan Elements Monthly Estimated Revenue

Based on your expenses, how much each month do you need to make? Now figure on a daily, weekly, monthly and

annually what your cash flow is going to be. What will be your types of income?

Short Term, Mid Term, Long Term What will be your income sources?

Stocks Indexes ETF Options

Types, directional, spreads, complex Currency

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Business Growth (appreciation)

Business growth is the measure of profit and growth of working capital.

Growth = (liquidated investments + revenue) – (operating expense + cash reserve + employee program)

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Breakeven point

At what point have you met your goals? This is called your breakeven point. This is a major milestone where the revenue is greater than the operating expense

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Target Growth; 1 Year Percent growth expected from working

capital Specify the Strategies used for obtaining

the targeted growth. Stocks Indexes ETF Options


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Target Growth; 5 Year Percent growth expected from working

capital Specify the Strategies used for obtaining

the targeted growth. Stocks Indexes ETF Options


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Re-investing in growth Budget for investing tools

Classes Conferences Subscriptions Computer upgrades Internet

Employee Growth Expanding Business

Diversifying

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Cash Reserves Emergency Funds Savings

Taxes Differences in taxes Stock vs. Options Incorporate or not Estimated tax payments Tax advisor

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Employee / Community Programs Employee retirement Employee Scholarship Programs

DiversifyingAs the business grows seek out

additional avenues of investments that generate a reliable as steady cash flow usually at expense of lower return. Examples are real estate and franchises

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Recommended Books

Eat that Frog, Brian Tracy The five Major Pieces of the life

Puzzle, Jim Rohn The Four Laws of Dept Free

Prosperity, Blaine Harris and Charles Coonradt

Rich Dad Poor Dad, Robert Kiyosaki Cash Flow Quadrant, Robert Kiyosaki

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Recommended Books

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Any Questions?

Creating a Business Plan Brian Cox 1/4/11 Nature is trying very hard to make us succeed, but nature...

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