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Dear BAM Mentor,
I am aware of the tendency to be a bit idealistic when working through the Financials section of a Business Plan. As I start thinking about the numbers, what are the hard questions I need to ask myself – or invite others to ask?
~ Crunching the Numbers
There always seem to be two extremes when it comes to the issue of financials in business planning. The first is what I term “magical thinking” and says, essentially, “Since I believe that God is leading in this business it is sure to succeed. Why waste time on financial plans?” The second and opposite says, “My business plan needs to look like something for a Harvard MBA project so I will be perfect on the numbers.” Both, as most extremes, are wrong.
I can fill volumes with stories of businesses that God “led” people to start that failed miserably. I can also point to businesses that either failed or failed to start in spite of incredibly deep and thorough financial analysis. However, I think we can resolve this dilemma based on some words that Jesus spoke related to discipleship:
For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish.’ – Luke 14:28-30, ESV
The point of this passage is to make sure of some basics before you launch into following Him and, by way of extension, before you launch into business. Loosely translated, it would be something like, “Don’t launch without thinking and don’t overthink launching.” In business planning, I’d suggest the following critical questions. Read more