As accounting business owners, when someone gives us a business plan to review, we do what almost every other recipient of such a document does: we flip to the numbers.

Yes, it’s important to understand a little history about the company. We want to know the bios of the founders and management team. We’re interested in the products and the vision. And assuming the owner wants financing, we want to know how much money is needed and why.

In the end, a business plan is just a request for financing, and no one is going to finance a company without looking at the numbers.

By numbers, we don’t mean the past. We mean the future. We mean a spreadsheet that shows us a sound, reasonable, and rational forecast of where the owners and managers expect the company to be in the next three years (anything after that is really just a guess and not worth the effort).

Business is about math. It’s about buying low and selling high. It’s about managing expenses, figuring out margins, and pricing correctly. Show us profits, and we can figure out whether or not an investment is worth it or not.

So, we look at the numbers, and we expect to see a reasonable, rational forecast on a spreadsheet. How can you do this? Follow these general steps.

1. Format Your Spreadsheet

Begin by formatting your spreadsheet in a manner familiar to financial experts. Down the side, list your revenue and expense accounts. Across the top, create columns for Year 1, Year 2, and Year 3. Ensure your forecast is based on cash inflow and outflow. Include a “notes” column that cross-references your assumptions behind each number. These assumptions should be detailed and research-based. While it’s fine not to include all the details on the spreadsheet, ensure you have supporting documentation and schedules that back up your assumptions. People reading your plan want a forecast grounded in the best available facts.

2. Forecast Your Revenue

Let’s imagine your accounting firm is setting up in a location with several other businesses, just like Alyssa’s Crafts and Art store. To project your revenue for the next three years, gather data by talking to other businesses in the area to determine foot traffic, consult with similar accounting firms to understand average client spending, and explore industry statistics. Assume a reasonable growth rate based on positive word of mouth and effective marketing efforts.

3. Determine Your Costs

Every service you offer as an accounting firm carries a cost, be it employee salaries, office space, or software licenses. List all your costs and expenses, providing documentation for each one. Importantly, don’t forget to include your own compensation in the forecast.

4. Sum It Up

Once you’ve covered all your bases, add up your projected revenues and expenses. Present the expected profits for the next three years clearly. A well-organized spreadsheet will not only impress potential investors but also make your plan more accessible and professional. This will set you up to start a successful accounting business.

5. Think Like an Investor

Put yourselves in the shoes of a potential investor or lender. Will this be a good investment? If you need a loan, demonstrate how you’ll comfortably manage the payments. For instance, if a lender provides $50,000 at a 10% interest rate, show how you can service the loan. On the other hand, if an equity investor offers $50,000 for a share of your firm, highlight the expected return on their investment. The bottom line is that your financial forecast, displayed on a well-structured spreadsheet, is the core of your business plan. The narrative you build around these numbers will only be effective if the figures add up.

To start an accounting business that will stand the test of time, you need to have a solid business forecast. This advice is also applicable for your clients, and this process of creating a business forecast will prove useful to your clients as well once you start an accounting business. For specific examples of how the forecast spreadsheet might look, read further here.

You can start a bookkeeping business, start a tax business or start a business advisory firm in a short amount of time with the mentorship and training programs offered by Universal Accounting School. Call 877-801-8080 to learn how, or click on this calendar to schedule a time to discuss your future that works best for you.

Are you an accounting professional looking to unlock the full potential of your clients’ distribution businesses? Distribution and reselling is a burgeoning industry that could provide an ample niche for professionals who start an accounting business.

Transforming a distributor or reseller into a valuable company may seem challenging, but it’s not impossible. Distributors often face challenges in attracting potential acquirers, as they’re perceived as vulnerable to price wars. In this article, we’ll explore how you can leverage innovation and intellectual property to set your distribution clients apart in the market.

The Power of Intellectual Property

Consider the remarkable journey of Miles Faulkner, the visionary founder of Blended Perspectives, a reseller specializing in Atlassian products, renowned for their software solutions for large teams. Faulkner’s story serves as a model for accounting entrepreneurs seeking to elevate distribution businesses and help their clients.

Faulkner’s aspiration was to create a more valuable reseller, and he accomplished this by developing his intellectual property, the Marketplace Analytic Research Service, or MARS. This innovative tool was designed to assist Atlassian users in selecting the most suitable aftermarket apps to complement their Atlassian software.

While Blended Perspectives still generated a significant portion of its revenue by reselling Jira and Confluence licenses, MARS became a unique selling proposition that set them apart from the competition. This distinction not only attracted prospective clients but also piqued the interest of Contegix, a larger reseller of Atlassian products. When Contegix acquired Blended Perspectives, the reasoning was clear: MARS provided a valuable differentiator. By owning this intellectual property, Blended Perspectives was more than just a distributor; it was a game-changer in the Atlassian ecosystem. This unique element justified a premium acquisition price and exemplified the worth of creating distinctive products and services in a fiercely competitive marketplace.

Evolving into a High-Value Company

Another inspiring success story is that of Mahul Sheth, who transformed a basic parts distributor into an eight-figure business. In 1995, Sheth founded VMS Aircraft, initially serving as a distributor of airline parts. His initial value proposition was being a “one-stop shop” for airlines and their maintenance crews to find parts and accessories. However, Sheth was determined to increase the value of his business.

Sheth recognized the need to evolve from a mere local warehouse for distributing third-party products into a sophisticated provider of advanced materials. He chose to focus on materials critical to airline safety that required meticulous handling. Sheth invested in a clean room to minimize dust, purchased dry ice containers for temperature-sensitive materials, and repackaged materials to offer smaller quantities.

Sheth’s transformation led to a remarkable increase in gross margins, soaring from 22-23% to an impressive 60-70%. Along the way, his commitment to value-added services attracted the attention of a French company eager to enter the U.S. market. Rather than competing with Sheth, they recognized the uniqueness of VMS’s offering and acquired the company for 7.4 times EBITDA. If you start an accounting business and land clients who can see increases like those, you’ll be set to profit and market your services to new clients. A great way to get started is to take an online bookkeeping course, an online tax course or enroll in business advisory courses.

In Conclusion

As accounting entrepreneurs, it’s vital to help your clients pinpoint their unique selling proposition and invest resources in developing their intellectual property. These strategies not only boost the value of their distribution businesses but also strategically position them for potential acquisition opportunities down the line. By following the footsteps of visionaries like Miles Faulkner and Mahul Sheth, you can empower your clients to elevate their businesses to new heights, making them highly attractive in the eyes of potential acquirers.

If you’re interested in starting an accounting business, adding more services at your business, or just learn the basics of bookkeeping, give Universal Accounting School a call at 877-801-8080. You’ll see massive progress at your firm or in your career. You can also schedule an appointment to discuss your future with our team of experts here.