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Create Your Business Plan with an Accountant and Avoid These Common Mistakes

Will your new business not only last, but flourish? Only time will tell – time, and your business plan. The strength of your business plan may reveal a lot about the feasibility of your business and the likelihood that it will work. That’s why creating a business plan can seem so daunting. A lot can go wrong between idea and execution. Creating a solid plan gives you a roadmap to follow, so it had better be an accurate map.

An accountant can help shoulder some of that burden. Getting a second pair of experienced eyes on your business plan ups your chances of succeeding right out of the gate. They may not help you fine-tune your marketing plans or proofread the documents for typos, but an accountant may be able to spot financial weaknesses and missed opportunities that you’re too close to see yourself.

  1. Unrealistic Expectations

Even if you’re a veteran of the industry in which you plan to operate, there are a ton of unknowns around your new business’s financial future. Making assumptions is an unavoidable part of creating a business plan. You have no choice but to make some educated guesses about things like your early profits and when you’ll hit the break-even point.

This is one of the single most important reasons to consult with an accountant. Involving an accountant allows you to make those assumptions based on the most accurate information possible so you can enter the business with eyes wide open. If you’re estimating X profits during your first year, but your accountant thinks you’re off by 25 percent, you can make adjustments long before you do things like commit to expensive retail space.

  1. Focusing on the Future and Ignoring the Past 

Building a business is all about looking ahead. When you’re crafting a business plan, it makes sense that you’re future focused. You look ahead to how your business might be doing in six months, in a year, in two years, and so on. But accountants don’t predict the future. What they can do is look at past data and analyze real numbers. There’s tremendous value in that when you’re making a business plan. How has the market for your services changed over the last few years? Have you made any mistakes in the way you interpreted your numbers? An accountant can help you see the whole picture.

  1. Forgetting About Compliance

Does your business plan take compliance into account? Even if you’re not entering into a heavily regulated industry, you may face some challenges around financial compliance. Do you know what type of reporting you’ll have to provide to the IRS and to your lenders? If you plan to hire a number of employees, are you prepared to adhere to the Fair Standards Labor Act? Do you have a plan for handling employee payroll?

Some compliance issues don’t have to be settled when you first create your business plan. If you’re starting out as a one-person operation and hoping to expand later, knowing how you’ll manage employee payroll isn’t super relevant. That said, compliance isn’t something you can afford to put off until the business is up and running. An accountant can help you think through all the pieces related to financial compliance and prepare for those responsibilities.

  1. Intermingling Your Personal and Business Finances

Mixing your personal finances with your business’s finances can be a highly risky move. There’s no guarantee that your business will succeed. If it doesn’t, will that have negative implications for your personal finances? Are you using your own assets to fund any or all of your business? Have you built an adequate firewall between the two, like by establishing a separate business entity? An accountant can verify that you have a workable plan to protect your own interests independent of what happens with the business.  

  1. Leaving the Plan Incomplete

A business plan doesn’t necessarily have to follow a particular template. It can be as vague or as detailed as you want, although the former may affect your ability to secure financing. But detailed is generally better when you’re talking about something as high-stakes as your own business. An accountant who has experience reviewing clients’ business plans can help you identify holes in yours. Are you missing key information on your balance sheet? Would your plan be stronger if you had more market analysis data?

Starting a business is a big leap. Working with an accountant to fine-tune your business plan is one way to make sure you know exactly how and when to make that leap. How can Sachetta Callahan help you launch your business? Contact us today!

 

By Stephen Sachetta

We’re pleased to announce a growth merger with Wealth Management Advisors, effective January 1, 2022.

Learn more about what to expect.