Category Archives: Ask Dr. Business

The Plan-for-Planning Process – Step 5

Step 5 – Asset Management

The fifth chapter/section in the business plan is the financial section. It should contain the projected Profit & Loss Statement, the Balance Sheet, Cash Flow projections, and key financial ratios for the business plan.

All of these financial statements should contain commentary where required to explain and clarify any specific numbers.

Additionally, any substantial capital expenditures over the business plan period should be noted and explained in the Asset Management section.

Summary level examples of these statements are:

                                                Projected Profit & Loss

                                                Operating Plan Period

                                                20XX     20XX    20XX


     Cost of Sales

     Gross Profit


     Net Profit

                                                   Estimated Balance Sheets

                                                   As at:  20XX   20XX   20XX



        Equity/Net Worth


                                                    Estimated Cash Flows

       Opening Cash 1/01/20XX

       Incoming cash

       Outgoing cash

       Closing cash  12/31/20XX


                                                   Estimated Significant Financial Data/Ratios

                                                    20XX     20XX     20XX

      Working Capital

      Inventory Turns

      Receivables Collection Periods

      Debt to Equity

      Return on Assets


                                                    Projected Capital Expenditures

                                                    20XX     20XX     20XX

     Asset Replacements

     Expenditures on

          Strategy 1

          Strategy 2

          Strategy 3

Reviewing the Asset Management will give any reader a clear picture of the projected financial situation of the company over the business plan period.

Step Three – What are we going to do it with?

Continuing with your business plan – the story about your business:

Step Three – What are we going to do it with?

Typically called – “The Marketing Summary” – this section/chapter identifies the products/services that the company offers, and their plans for each during this business plan period.

The format for this section is:

  • A description of the product/service, and the market(s) that it competes in.
  • Where the product is in its product life cycle (E,G,M,A).
  • How much it contributes to the profitability of the company.
  • The specific marketing strategies for this product/service.
  • Any plans for modifying this product/service to meet changing customer requirements, and by when.
  • Any concerns about competitive threats.

When completed this section should present a clear picture of where the company is in its life cycle and the individual products/services positions in their life cycles that support and contribute to the overall company life cycle position.

Ideally, this should be summarized in a table-like presentation:

Product  Life cycle position  Projected sales  Profit contribution

A                G                                    Yr 1 Yr 2 Yr 3         Yr 1 Yr 2 Yr 3

B                M

C                 A

D                E

Company        G

As you can see this simple presentation gives the reader a complete picture of how each product/service contributes to the total projected sales and profits of the company for each year of the business plan period, as well as where each is in their product life cycles, and the company as a whole.

In combination with the narrative for each product/service you have a complete presentation of “what we are going to do it with”.

Stay tuned for Step 4!

As always, send us your questions for Dr. Business to

Are mentors important for entrepreneurs?

In this week’s question, we ask Dr. Business “Are mentors important for entrepreneurs?”

Dr. Business says:

“Entrepreneurs are techies of one sort or another, and typically have never taken any courses on the fundamentals of running a business. As a result they need help and mentors are the ideal individuals to guide them during the critical start-up of their new business. They can help right from the beginning by sharing their feelings about the commercial viability of the entrepreneurs idea. Many entrepreneurs have great ideas that just will not fly either because there just aren’t enough customers, the cost are prohibitive, the technology too complex for the current market, or the competition too great.

If the mentor feels the idea has merit then the best that they can do for the entrepreneur is to guide them through the development of a business plan, and most importantly the break-even analysis for their first year of operations. The business plan is critical for two reasons (1) as a much needed education for the entrepreneur, and (2) as the basis for explaining and justifying the value proposition for potential investors. The break-even analysis lends even more credibility to the presentation to prospective investors.
Other types of mentors are accountants who can also help entrepreneurs understand the value of developing timely financial statements and budgeting. And, lawyers are essential to any business, and especially start-up’s who need help with a variety of contracts. Lastly, mentors who are experts at marketing can be very helpful in the current era of social media and mobile marketing.
The best advice I have for any entrepreneur is to establish an Advisory Board of mentors as soon as possible before launching your new business. They will save you from yourself.”
Thanks, Dr. Business.  As always, if you’ve got a specific question you want Dr. Business to address, email it to us.


Starting a business is never easy.  If it was, everyone would be doing it.  The challenge for most is the unknown.  When you haven’t started and run a business before, you really don’t know what to look out for.  This is where many turn to the Internet for answers.  We will spend hours searching from site to site to find the best advice.  I know.  I’ve done it many times myself and I’ve started a few businesses that way.  In fact, I started a new one this summer and am still in startup mode.  There are two ways to start a business: planned and unplanned.

My first business I thought I was very smart and could figure out everything I needed to know when I came to it.  Unfortunately, I didn’t know as much as I thought I did.  There were many legal, insurance and finance questions I couldn’t answer.  I had to stop the business to understand what these issues meant.  It really became a nuisance when I would have to stop selling my services to go figure something out.  It took me a couple of businesses to figure out that you really want to plan out your steps as much as possible before you start the business.  There’s nothing worse than having to hold a customer off while you go obtain some certification or license so you can offer them your service.  Planning early allows you to focus on selling the business when you start.  After all, that’s where the money comes from.

In my most recent business, something outside of my expertise, I decided to do the right amount of planning prior to kickoff.  I’m actually selling services to the government so I can’t afford to be unprepared.  So, I chose a detailed planning process to prepare the business.  Since this business was outside my expertise, I needed a guide to help me keep from wasting so much time figuring things out.  I’ve worked with Robert Donnelly for years and chose the guidebook he released some years ago, entitled “Guidebook to Planning.” It is a great start, complete with examples, illustrations and even forms.  Donnelly has a lot of experience in entrepreneurship.  In fact, some of the information from this book has been utilized in training classes he developed for BUSINESSWEEK and INC magazine.  This guidebook is a compilation of a lot of experience and will save you considerable time developing that invaluable plan for your startup.

While my latest business is still in startup mode, I haven’t had to spend any time going back to setup something I missed in the beginning.  Right now, I spend my time selling the services to potential customers. It’s exactly what I want to be and need to be doing.

Check out Donnelly’s Guidebook at Amazon.  Get the book.  Use the process.  Then, contact him to answer questions that still plague you.  It doesn’t get any easier than that.  Remember, you can always do things the hard way.  Why not take the time to give yourself a great start?

guidebook to planning

Ask Dr. Business – What is the first analysis an entrepreneur needs to perform?

In this week’s post, Dr. Business tells young entrepreneurs about the first thing they need to figure out when starting a business….and it isn’t what you think!

This week’s question:  What is the first analysis an entrepreneur needs to perform?

Dr. Business says:

You would think that anyone starting a new business would have a business plan – right? Wrong!

An even more basic is the need to develop a break-even analysis for their first year in business. When you consider that most entrepreneurs are using their own money and money that they have convinced relatives and friends to invest, shouldn’t they at least do some analysis as to how are they going to recover that investment, and at a minimum break-even for that initial year?

Every new business requires two levels of investment. The first just to get ready to do business, and the second the monies required to operate the business after you have opened the door. Even if you are only developing a new App, it costs money and time to develop and test the App. Then it requires more money and time to market the App. Hopefully, you will generate enough revenue from the App to cover these investments of time and money during the first year of operations. If not, then obviously you have lost money.

The question then is do you have enough money to continue the business? The statistics are that most new businesses fail within the first 12 to 18 months. Why is that? Primarily because there was no plan and as a result the founders ran out of money.

Let’s take something as simple as opening a bagel shop or pizzeria as an example. First, space has to be leased and constructed to accommodate the equipment required to make bagels or pizzas. Then, the equipment has to be purchased, installed and tested.  After which, the rest of the space has to be developed to accommodate customers, as well as adding a phone, fax, computer, and other equipment. This represents the initial investment just to be ready to make bagels or pizzas. Then ingredients have to be bought, employees hired, menu’s created, and some marketing and promotional materials developed to let prospective customers know you are in business. Once the doors are open, this second level of investments have been made, and will continue to accumulate as operating expenses.

Now the founders have to determine how many bagels or pizzas they have to sell every day, week, and month, to cover all the money that has been invested just to break-even, and is that possible? The question also remains “why should customers buy your bagels or pizzas, as compared to those of all of your competitors nearby”?

As this example illustrates, the planning that has to be done for any new business just to determine if it can break-even in the first year of operations is critical. It also demonstrates how easy it is for entrepreneurs to fail without doing this basic exercise before they begin.

Have you ever thought about how many bagels or pizzas your favorite bagel shop or pizzeria has to sell every day to make any money?

There is an old maxim: Nobody plans to fail…the just fail to plan.

Ask Dr. Business – Do I really need an MBA to start my business?

In this week’s post, Dr. Business answers the question about the need for an MBA to start a business.

Here’s what Dr. Business had to say on the topic.

The more education in business that anyone can get before starting a business is always a good thing. However, getting an MBA is not a prerequisite for young professional entrepreneurs who want to start a business. While all the courses they would take would help them with one aspect of their new business or another, MBA courses are really designed for those middle managers who want to continue to climb the corporate ladder, not start an entrepreneurial new business.

The exception to that is the MBA course on Entrepreneurship & Innovation that I teach. It is an elective and as such attracts MBA students who have an interest in starting a business, or at least getting to know more about all that is involved in the process. The primary deliverable in the course is the development of a business plan for an idea that they have had for a business for a long time. The value of the course for these MBA’s is that it gives them an opportunity to see if their idea for a business is commercially viable, or not. More importantly, they get to see how all the other MBA courses that they have taken contribute to managing a successful business in one way or another. Every year several of my MBA students in this course actually use the business plan they developed in the course to start a business.

There are a multitude of sources for young professional entrepreneurs to get advice and support. One of the best sources is the multitude of incubators and accelerators that are available now at many colleges, or affiliated with universities in one way or another. Colleges and universities also have successful alums volunteering to be mentors for would-be entrepreneurs. Lastly, there are a multitude of books that have been published and continue to be published on entrepreneurship and how to start and manage a profitable business. Success stories are also published almost every day in the business press.

The best advice I have for young professionals is to watch ABC’s TV show “SharkTank” to get a first hand view of how NOT to do it!

Join us next week when Dr. Business breaks down another burning question in the mind of the startup entrepreneur.

ASK DR BUSINESS – What barriers do entrepreneurs encounter?

In this week’s post, we ask Dr. Business to identify some of the barriers new entrepreneurs encounter.

Dr. Business says:

“The biggest challenge facing entrepreneurs is not squandering their scarce start-up resources. Since most entrepreneurs have not developed a business plan before they start their business, they cannot anticipate the typical cash consuming pitfalls that could have been avoided by having a plan. This is followed by the need to find investors to begin marketing their unique value proposition. The majority of any entrepreneur’s start-up cash is usually consumed in the process of getting ready to do business. For example, starting a bagel shop, pizzeria, or developing an App, requires time and money before you sell anything.

Once these basic challenges are dealt with there then comes a host of other operating challenges having to do with: finding employees, attracting initial customers, accounting for the business, legal issues, and the time and energy required to convert their entrepreneurial idea into a commercially successful and profitable business. Not to mention the “buy-in” required from family members, partners, and others. “
If you have a specific startup problem, share your problem with us and we’ll have Dr. Business share his advice.   Send us your info at

Ask Dr Business – What are the biggest challenges in being an entrepreneur?

In this week’s post, Dr. Business address the following question:

What are the biggest challenges in being an entrepreneur?

Being an entrepreneur requires having a unique passion for your solution along with the willingness to commit the time and energy required to bring it to fruition in the form of a profitable business. Entrepreneurs also need to be able to accept rejection from the myriad of naysayers they will encounter along their way to success. Besides these fundamental challenges an entrepreneur has to be able to ask for help, which is typically against their nature and concern that someone will steal their idea.

Lastly, entrepreneurs do not like controls so they resist the need to develop a business plan. As a result, they encounter a variety of critical pitfalls that could have been avoided if they had only taken the time to go through the inexpensive and educational exercise of putting a business plan together before they started. Developing an even more fundamental break-even analysis for the first year of operations is also a challenge for many entrepreneurs. Without doing these basic business exercises many entrepreneurs exhaust their meager start-up funds and fail before they even launch their solution for a better world.

“Nobody plans to fail…they just fail to plan” – Doctor Business


Ask Dr. Business – How do I know if I want to be an entrepreneur?

This week’s question:  How do I know if I want to be an entrepreneur?

Dr. Business:  Everyone has an idea for a business, but not everyone can be an entrepreneur and convert that idea to a commercially successful enterprise. Why is that? Primarily because the concept of entrepreneurship is inherently about taking risks, and most people are risk averse. Additionally, not all of their ideas are viable enough to be profitable, or there just aren’t enough customers, the cost of making it happen is beyond their means, etc.

Another major requirement for success as an entrepreneur is a deep rooted passion to the extent that it consumes them. Entrepreneurship can be a long hard road to success.  Passion for your purpose is vital.

Lastly, is the lack of experience in running a business. For all these reasons, I require the students in my course on Entrepreneurship to develop a business plan to see if their idea is commercially viable and to help them understand what it will take in terms of time, money, and pain to start and manage an embryonic business. It’s an exercise that can save them from themselves. The popular show “Shark Tank” is a wonderful platform for anyone wondering if they want to be an entrepreneur to observe what happens to would-be entrepreneurs and their ideas.

Ask Dr. Business: What classes can I take on Entrepreneurship?

This week’s question:  What classes can I take on entrepreneurship?

Dr. Business:  Many colleges and universities have courses on entrepreneurship. They are good to gain a fundamental understanding of entrepreneurship, but they need to be supplemented with some hands-on practical experience to achieve a better understanding of what it means to be an entrepreneur.

In my MBA course on “Entrepreneurship & Innovation”, since I am the epitome of an entrepreneur I share with my students what I have done and I am still doing of an entrepreneurial nature to give them a real life flavor for what’s involved. In addition to that I have selected three course deliverables: (1) develop a paper on an entrepreneur outlining what problem they identified, the solution they developed, and how they raised enough money to implement the strategy that has made their business what it is today, (2) select a relatively new website created by an entrepreneur that they currently use and get value from, and present it to the class explaining how it has evolved, and (3) take an idea that they have for a business and develop a business plan to determine whether or not it can be a viable, profitable enterprise. This project is an invaluable learning experience for any would-be entrepreneur.

As a result of taking my course, on average, several of my students have started their own businesses every semester. This blending of my actual experiences as an entrepreneur, the study of other entrepreneurs, and the actual exercise of constructing a business plan on their own idea, has proven to be a model for success in terms of teaching the concept of entrepreneurship.

What’s your question for Dr. Business?