Business Planning Blog

Q: I have Rosetta Business Planning software in the past to produce Business Plans and to monitor my business’s performance. Is it possible to use the software to assess the value of my business?

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A: Rosetta Business Planning software is equipped with a very powerful and flexible Business Valuation function. This function can be accessed from the Valuation option on the main Toolbar. Using this part of Rosetta Business Planner’s functionality you will be able to evaluate your business utilising a variety of methods. For more details please follow:

Business Valuation using Rosetta Business Planner

Excellent opportunity to acquire both theoretical and practical skills necessary to produce a fully comprehensive business plan.

Business Planning seminars are designed to be a full day hands-on sessions during which each student will have access to a PC equipped with the Professional version of Rosetta Business Planner software as well as other applications. Using this award wining business planning software you will be able to produce a complete business plan for your business under close supervision of our senior consultant.

At the end of the Business Planning Seminar you will be able to take back with you:

• Printed copy of your Business Plan.
• Electronic copy of your Business Plan.
• Business Planner software – demo version.

The next Rosetta Business Planning Seminar will be held in Manchester on Friday the 1st of July 2007. Should you wish to attend this seminar or require more information please do not hesitate to Contact US.

Q: I have completed my Business Plan using Rosetta Business Planning software. What in your experience do I need to check before submitting it to the potential investors?

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A: In my experience investors tend to pay attention to a number of parameters when reviewing a Business Plan, but first on the list would undoubtedly be the Profit. The reason it tops the list is very simple – it is very easy to understand (total income minus total expenditure) even without having any specific financial knowledge and it is a very clear indicator of business’s “health�. You can see Profit analysis in the Highlights screen or you can run a full P&L report.

So what sort of Profit position is likely to upset a potential investor?

If you analyse the example you will be able to notice two things. First of all the proposed Business Plan suggests a Profit of over 20% in the second month of trading. Secondly the Profit jumps to over 60% in December and then back to 39% in the second year. I am not suggesting for a minute that this Business Plan is wrong – may be for this particular business venture this Profit analysis is correct. However from a point of view of potential investors this Business Plan will certainly ring an alarm bell. Investors like to see a gradual and steady increase in Profit level. They don’t like to see very high figures as it usually indicates overconfidence. In summary: if your Business Plan tends to look like the example above - double check it to make sure that your assumptions are valid and if your are 100% certain that you did not make a mistake then attach a clear set of notes to the P&L statement explaining the Profit position.

Q: Where can I find some useful information on how to write a Business Plan?

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A: It is not easy to write a good business plan without spending a lot of time and money.

There are millions of different web-sites offering all sorts of solutions from simple MS Excel templates (usually between $50 to $150) to almighty Cognos and Hyperion ($20,000-$100,000).

Having sad that there are some free resources available on the internet that can help with this task.

First of all, if you are looking for some general information regarding the recommended structure and content for your business plan try:

Business Link (UK)

United States Small Business Administration

While neither one of these two sites offer any practical tools or templates they contain a lot of useful information that will no doubt help you in constructing a business plan.

Major Banks are usually very good and totally undervalued source of free information regarding business plan as well as some really useful templates and tools. Most of them have some sort of recommended templates or a simple software application offered free to the existing/potential customers.

For example:

HSBC

Royal Bank of Scotland

All of the above is very useful if you already know all of the parameters for your business plan and just need some assistance in putting this information into a proper format/presentation. But what can you do if you don’t know what the cost of sales, expenditure, depreciation, loan repayment, income before tax, etc. are going to be for your proposed business venture. Well, in this case you will need a software system known as Business Planner to help you in calculating all the parameters for your plan.

Q: I am using Rosetta Business Planner PLUS and I want to check is it possible to work with two or more saved plans, because I want to consolidate data from few plans in another one without having to enter data manually.

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A: It is certainly possible. It can be achieved by using “Connect to MS Excel file� function.

First of all instead of entering data directly into any business plan you will need to enter data into MS Excel spreadsheet. Once this is done you can link any number of business plans to the same part of spreadsheet via “Connect cells to MS Excel file�.

As result when you update the data in Excel it will automatically update all the associated business plans without the need for any additional data entry.

I have used this method many times to produce analysis for different companies within one group and consolidate the results together.

Q: I am using Rosetta Business Planner and I can’t find the way to input the raw material cost based on production in units and not in sales value. I have production in Kg. linked to raw material in Kg. In my case I have several unit price discount based in volume and region. The structure of discounts is complex and I don’t see the way to create this in the software.

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A: Sometimes calculation parameters for a specific type of business are so complex that it is impossible to accurately define them in the Business Plan.

Once such example could be variable discount levels combined with a different product/market pricing and volume. In this type of situation “Dynamic link to Excel� enables user to address the situation by linking Rosetta Business Planner to external spreadsheet.

In your example the easiest way to address specific discounts for different markets/sales volume would be done by linking Rosetta Business Planner PLUS to the spreadsheet containing all the relevant calculations. This approach offers you a great deal of flexibility in the way you calculate results.

If you wish to try this approach, please follow the steps as outlined below:

Step 1 :In “General Data� please change “Sales Forecast by� to Cash instead of Units.

Step 2 :Update “Sales For Planner.xls� spreadsheet as appropriate for your business. You can create any number of similar spreadsheets for different scenarios.

Step 3 :Use “Connect Cells to MS Excel file� function to link Business Planner PLUS to XLS file.
This will enable to link your Business Plan to an appropriate cell in XLS.

Step 4 :You will be able to see that the results from XSL file will be displayed in Business Planner.

As you can see this method will enable you to calculate different results for different products, markets and sales volumes.

Once the spreadsheet is linked to Business Planner via “Dynamic link to Excel� Business Plan will be updated automatically should you choose to update the spreadsheet. This approach offers you a great deal of flexibility in the way you calculate results.

Q: I can not understand how the income tax is calculated in the Profit and Loss screen in Rosetta Business Planner. I have set tax at 15% in the Financial Parameters screen yet the amount for January-08 to June-08 is incorrect. Accumulated income tax in year 2007/08 is also wrong.

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A: Concerning income tax - the software calculates tax on the accumulative basis.

If you had accumulated loss in the Previous Balance, and/or in the first months of a business plan, Rosetta Business Planner will start calculating income tax only when the accumulative profit is positive. In the specific case of this business plan: loss in the previous year was -182, profit in the current year was +245 and therefore the income tax is calculated based on the accumulative profit of 63.

Q: How can I configure Raw Materials inventory and Finished Goods Inventory in my business plan? Finished Goods Inventory must include raw materials, direct labour and other direct expenses.

Inventory level (days) line in the Financial Parameters screen in Rosetta Business Planner seams to be having no affect on the analysis in my business plan.

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A: The Inventory in a business plan refers to all types of inventory: raw material, work in process and finished goods. The internal mix is not detailed.

The calculation of the Inventory is based on the Inventory days, applied on the direct cost of products in the Product and Cost table in Rosetta Business Planner. This cost includes material labour and other costs.

For example - if you have a product that costs, per unit, $10 material, $20 labor, $5 other costs (total of $35 per unit) and you sell 1,000 units per month and you want inventory of 30 days, the inventory that Rosetta Business Planner calculates will be $35,000. You will see it in the Balance for this month and the Purchases and Salaries in the Operating Cash Flow will include the costs of the inventory as well as the cost of sold products.

What happens if there are months without sales (e.g. at the beginning of the business plan) or you want to have inventory more than the usual days - than you can use the line Minimal Inventory in the Financial Parameters screen in Rosetta Business Planner and enter the amount of inventory that you want. If this amount is greater than the inventory calculated by the Inventory Days, this will be the inventory calculated in the Balance.

For example, if in the above sample you also enter $50,000 in Minimal Inventory, the inventory amount will be $50,000. If you enter $20,000 in minimal Inventory, the Inventory will be $35,000 as calculated based on the number of days.