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CREATING THE FINANCIAL PLAN
Company
Prepared by
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Date
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Answer these core financial planning questions
Can I make a profit building my projects?
Yes
No
How do I know that?
By when do I expect to be operating profitably?
On what do I base this expectation?
What is my start-up budget amount for:
Interim income:
Marketing:
Tool and vehicle acquisition:
Safety items:
Computer and software:
Is the money required in my start-up budget available?
Yes
No
If not, where is the money coming from?
Have I developed a budget for the first year of operation?
Yes
No
Is the budget realistic?
Yes
No
Develop pricing strategy
Am I going to be the low-cost, the average cost, or the highest-value builder in my market segment?
Low-cost
Average cost
Highest-value
What is my Unique Value Proposition (UVP)?
What percent of Total Revenue will my COST OF GOODS SOLD represent?
What percent of Total Revenue will my GROSS MARGIN represent?
What percent of Total Revenue will my OVERHEAD represent?
What percent of Total Revenue will my PROFIT represent?
My labor cost burden for production staff is:
My labor cost burden for clerical staff is:
I will be paid:
On the regular payroll cycle
As the business is able to pay
When I need the money
Select your accountant
Does my accountant know construction practices, Job Cost accounting, Percentage Completion accounting, and Completed Contract accounting?
Yes
No
I will have to ask
Do I need a bookkeeper and an accountant?
Yes
No
Set up necessary accounting procedures
Will the bookkeeping be done in-house?
Yes
No
Have I investigated remote bookkeeping?
Yes
No
Will the payroll be done in-house?
Yes
No
Do I understand the payroll withholding requirements for deposits and payment?
Yes
No
Do I have a system set up to handle garnishments and other incidental withholding for employees?
Yes
No
Will the accounts payable be paid in-house?
Yes
No
Set up proper record-keeping and financial management
Does my bookkeeping software include job cost accounting?
Yes
No
Will I be allocating direct expenses to projects?
Yes
No
Do I have the knowledge and discipline to allocate direct expenses to specific projects?
Yes
No
Do I understand the information I receive from my accounting program?
Yes
No
Do I understand what the CASH FLOW STATEMENT tells me about my business?
Yes
No
Do I understand what the INCOME STATEMENT tells me about my business?
Yes
No
Do I understand what the NET WORTH STATEMENT tells me about my business?
Yes
No
Set up your banking relationship
Have I introduced myself to my banker and had a preliminary 30-minute meeting?
Yes
No
Have I provided my banker with a copy of my budget and my current financial information?
Yes
No
Does my banker know my story?
Yes
No
Open a business bank account
Do I have a
business-only
bank account
Yes
No
Do I avoid co-mingling personal and business income and expenses?
Yes
No
Establish a Line of Credit
Have I told my banker I will be talking to her "at some time in the future" about setting up a business line of credit?
Yes
No
Select an Insurance Agent
Does my insurance agent understand construction?
Yes
No
Does my insurance agent primarily represent business accounts?
Yes
No
Identify the major financial risks
I have identified at least three major liabilities inherent in owning a business
I have identified at least three major liabilities specific to owning a construction business?
Satisfy insurance requirements
Do I have insurance in place which covers my business for the risks I have identified?
Yes
No
Have I chosen to self-insure any of the risks identified?
Yes
No
Worker's Compensation Insurance
Will I have employees in my business?
Yes
No
Do I understand the importance of properly categorizing the employees in my business?
Yes
No
If I already have employees, can I change the task categorization of any employee to reduce Worker Compensation insurance costs?
Yes
No
Worker's Compensation Insurance for subcontractors
Have I shown my insurance agent the Subcontractor Agreements I have in place to mitigate my financial exposure?
Yes
No
Do I have a system in place to track my subcontractor General Liability and Worker Compensation insurance policies?
Yes
No
Do I have the Independent Contractor forms available on which subcontractors can explain why they do not have to provide coverage for their employees?
Yes
No
Do I have completed copies of the Worker Compensation insurance forms for each subcontractor claiming exemption?
Yes
No
Note 1
Note 2
Note 3
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