Planning for small business owners

Illinois small business owners should create a business plan even if they are not required to do so to get a loan. A business plan has a number of uses and can help a new owner set goals, make projections for cash flow and estimate expenses. A budget is necessary as well. This will change over time, but a business plan and a budget provide an owner with a framework for moving ahead as well as for facing challenges that arise.

One of those challenges might be cash flow problems. Projecting cash flow is important, and if the amount coming in cannot cover outgoing expenses, the business model must be examined for ways to boost sales. Small business owners also need to understand balance sheets, and a new one should be generated monthly. A bookkeeper or software programs should be able to create this document that allows an owner to get a quick overview of where the company is financially when it is necessary to make quick decisions.

Owners must also understand and periodically adjust pricing. This includes understanding concepts like gross margins and hard and soft costs.

Selecting the right business entity is another important aspect of planning. Depending on the size of the business, the number of owners, the type of business and other factors, a limited liability company might be preferable to a corporation or a partnership. An attorney who has experience in advising start-up companies can explain the advantages and disadvantages of each, including the type of regulatory compliance that will be necessary both upon formation and during the venture's operations.

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