From The Side Lamps Glow

Posts Tagged ‘Business Plans’

CFO Insights on Business Plans & Financial Projections

Posted by From The Side Lamps Glow on August 12, 2010

Today I co-counseled at Seattle SCORE with an individual (Ms. NC) who worked as a CFO for several internet/software & manufacturing firms here is Seattle area. I thought this will be a great opportunity for me to meet and learn from the highest professional in the hierarchy of the field of my interest (Finance).

Apart from the little reading that I did during my bus ride, I learned little bit about the importance of business plans and financial projections.

The first aspect that caught my attention today was about Leadership. Darwin E. Smith was the CEO of Kimberly-Clark for 20 years who on retirement, reflected on his exceptional performance, saying simply, “I never stopped trying to become qualified for the job.” I was inspired by this statement and hope to put it in practice.

We met 3 different clients today whose business ideas were quite varied but in all instances Ms. NC could clearly establish the importance of financial projections & business plan’s.

– Client 1: Couple of years into his business. Owner was trying to expand the operations. It made easy sense at the beginning why financial projections were important in case of client 1 who was looking for investor money and how the projections become part of the bigger business plan.

– Client 2 was trying to see the viability of employing new staff and how this would impact her business. Even in this case, Ms. NC’s argument was very convincing as to why a business plan and projections will make sense. I could see as to how documenting the plan and making scientifically guessed financial projections gave the client the ability to use the plan and the data for making decisions and see how viable different alternatives were. In this case the client was not looking for any funding nor was she trying to convince anyone about her business.

– Client 3 was trying to take advantage of the SEAP (Self Employment Assistance Program) program offered by SBA and came to the office well prepared. By prepared I meant she had her vision as to what she wanted to do and how she wanted to get there by documenting her thought process in the form of a business plan that included projections. Even in this case the advantages of the documents were clear.

In conclusion, what I learnt today was that entrepreneurs and business owners might not realize the importance of business plans and financial projections, these documents should be integral to every business. Even if one is not looking for expanding their business, these documents can be used as a beacon in some instances or as a benchmarking to do some useful variance & comparative analysis in their respective industries.

Overall I would say it shows the owners commitment to the cause and also good business practice.

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