This is a business plan and you need to have some good numbers. There´s no reason not to. Forecasting your numbers is the only way you´re going to know what´s going on in your business.
New business or not, you can work expense numbers from the bottom up, and then check them from the top down. Here´s how:
- Start with a list of the people you need to do what you plan to do. Make sure you include yourself, and do this even if you´re the only person involved. All the people need to get paid. Make a list with names or positions or groups on the left and what you pay them across 12 columns for months, then 3 more columns for the years, the first to summarize the first 12 months and the other two for years 2 and 3. That´s your personnel plan, and it gets you on your way. If you´re the only person involved, then it´s a simple list but you still make it because you need to include yourself in the list of expenses.
- Then make a list of expenses. Start with what you´re paying to people from the other list because that´s an important expense. Make a row on the list for what I call payroll burden — payroll taxes, insurance, and benefits — and calculate that based on payroll. If you have no idea, multiply the payroll by .2 as an estimate.
- Continue with other obvious expenses. It doesn´t take past history to calculate how much space you need and look at the local market to estimate your monthly rent. You can do that with a few phone calls. Make a few more calls about what you´ll end up paying for telephones, computers, Internet access, bookkeeping, legal services, insurance, etc. You should know enough about the business to be able to make estimated guesses for what you´ll have to spend on advertising, travel, sales and marketing materials, and other key expenses.
- Make another list for sales and cost of sales. You can´t do a product or offer a service without having a pretty good idea what it costs to deliver. Break things down into component parts. Even services have cost components that you can estimate if you break them down. A taxi service has gasoline and maintenance. A publication has printing and paper. A store has whatever it pays for the goods it sells. A restaurant has food and drinks. Make a list and estimate how much you can reasonably expect to sell and what that will cost you. If you still have no idea, then you have a real problem.
I hope you´re a student working for a class, because it´s scary to think of a real person starting a real business without having a pretty good idea of what needs to be done. If you are a student, then make some more calls and find somebody with a similar business who is willing to share information. Find some standard financial profiles for standard companies, which are available at different websites.