Using QuickBooks to Create a Business Plan
Successful businesses use business plans. Even if you are a sole proprietor or you run a family business, you should have one. A business plan can help you stay on track to reach your goals. You can use QuickBooks to create or polish your business plan. QuickBooks tools are very easy to use, and we’ll give you some helpful tips here.
To start creating your business plan, launch QuickBooks and select Company > Planning & Budgeting > Use Business Plan Tool. Depending on the version of QuickBooks you use, you will see something like what’s shown in Figure 1. You will be guided through the entire process by a Wizard. Each screen will give you helpful information and ask specific questions about your business. You provide answers to the questions, and the wizard places your data in the correct place in the business plan. It’s that simple!
First, the QuickBooks Wizard will ask you for some information about your company. If your business is new, you’ll have to estimate some information, such as how much of your sales revenue will come through credit. You’ll be able to provide more concrete answers to other questions, such as what your customer payment terms will be, and the date to begin your business plan and financial projections.
Figure 1: The QuickBooks Wizard will walk you through the entire process of creating a business plan.
Next, the Wizard will ask you about your income. You’ll have the option of manually completing a spreadsheet, with up to 20 categories, or using the Income Projection Wizard. If your data is already in QuickBooks, use the Wizard. Anyone who reviews your business plan will examine these numbers more closely than any other numbers in the plan. You must be able to provide support for how you reached them.
If you decide to project your income manually, you will need to calculate the Cost of Goods Sold, or COGS. COGS is comprised of three elements – materials, labor, and other. You need to know what percentage of each revenue dollar pays for the actual material cost of your products. If you are a service provider, you can enter the associated materials cost. You will also need to know what percentage of each revenue dollar goes to employee labor (even your own). Finally, you need to know what percentage of each dollar goes toward other costs.
Expenses and more
When the Wizard asks you about your expenses, you will again be able to choose between entering the data manually or allowing the Expenses Projection Wizard to do the work for you. If you use the Wizard, your projections will be based either on the last 12 months of history, or an average of the last 12 months of data.
When you reach the Interview section, you’ll need to have the following data available:
• Beginning account balances
• Assets you own or need to buy
• Cash available to invest
• Amortization and depreciation of business property
You’ll provide information about your inventory (fixed or variable, minimum balances, and so on), vendor financing, lines of credit, and your own total credit limit.
QuickBooks will take your data and automatically fill in other areas of the business plan, as shown in Figure 2.
Figure 2: The business planning tool pulls in data you have entered
Writing your Business Plan
When it’s time to write, you’ll see that the Plan section is already organized in a business plan format, and it contains every topic that you need to address. You can move around and toggle between sections as you work. You’ll be able to view an outline tree, tips and examples, and the text entry window, as shown in Figure 3.
This is primarily a text-based section that includes all the important information about your company – your company’s background, a description of your products and services, and a description of the competition. This section will also include some numbers that you will supply, along with your rationale explaining how you arrived at them.
Figure 3: The Plan section
Your Business Plan is done!
When you have finished entering all of the information, QuickBooks puts your Business Plan together, automatically generating charts, tables, graphs and more. Everything is organized correctly, and you can view and print your plan in the professional format that QuickBooks provides. Now you have a business plan that you can show to the bank or to an investor, or simply review and revisit now and then to make sure your business is going in the direction you want.