The Business plan is a written document that clearly and convincingly demonstrates that your business can sell enough of it products and services to make a satisfactory profit for yourself; provide sufficient profit to attract lenders and potential investors and finally to provide sufficient cash flow to service debt and pay investors. That is what business is all about.
Ditch the software crutches. Software is not a substitute for critical thinking. Break down the logic in the software (how, what and why). Black box software cultivates an addiction for repeatedly mindless subscriptions. Break the habit, trust your logic to reason – you have profitable trades that you thought through yourself. As you “outsource” the administrative tasks associated with trading (e.g. record keeping of trades), do not outsource your brain.
But most of all, it must demonstrate financial performance. It must clearly set out your mission, your objectives, your vision. Where do you want to be at some point in the future? You should spell out your strategies, that is the pathway or methods you will employ to get you from here to there, to achieve your objectives and finally to describe the steps along the way, your “to do” list. If you don’t or can’t articulate them, you won’t do them.
Going into business entails serious financial risk, a major investment of your time, even disruption to your home and family. You must understand your products, your customers, your competitors. You must be able to sell yourself at a minimum, as well as your products and you must have sufficient financial knowledge to start and run your business. The only way I know to be almost sure that your business will make it is to prepare a Business Plan for yourself first and later perhaps for others, including lending institutions.
After watching Flip this House, real estate investors think that rehabbing houses is the only real estate investing strategy out there. Although flipping houses can bring substantial profit, you can also loose a ton of money. Let’s look in detail at what’s involved.
There are many ways to dissect and collect the data. Hopefully, you have made this a part of your regular monthly data collection and analysis process. If you haven’t done it yet, you need to start.
Some planners suggest even more than five to eight times your annual income as the level of coverage you should carry. My suggestion is that you get your financial house in order, which means getting your net worth and cash flow examples together, and go talk to a good insurance agent about your needs.
Depending on the country and even the state in which you buy your property, a significant amount of your money may be spent on purchasing fees. In Germany, for example, you may pay up to an additional 20%-25% of your house purchase price in fees and other charges. Knowing how much it will cost to purchase your income property will help ensure its profitability.