Creating a Business Plan Brian Cox 1/4/11 Nature is trying very hard to make us succeed, but nature does not depend on us. We are not the only experiment. - R. Buckminster FullerR. Buckminster Fuller

1/4/112 Introduction I’m a part-time trader and earn my living as an engineer. There is likely some traders on this call who earn their living trading. I invite these professional traders to add their insights and if possible, share their business plans with the rest of the group.

1/4/113 Introduction A business plan needs to be a living document that you add to; change and update on a regular basis. It is not static. Its a way to stay focused on the your trading.

1/4/114 What is a business plan?  A written document that describes a business, its objectives, strategies, market and financial forecast.  A blueprint and communication tool for your business. A device to help you, the owner, set out how you intend to operate your business. A road map to tell others how you expect to get there  In a nutshell, the business plan should clearly explain the what, why, when, who and how of the project. It should be a comprehensive explanation of the opportunity, the people involved, the money required to implement the plan, where it will come from and what financial results the opportunity is likely to produce.

1/4/115 Why do we as traders need one?  A business plan will guide us on achieving our goals  It can be a collection of spreadsheets, lists, research summaries, and other documents stuffed in a binder that you refer to and update on a regular basis  It enables budget expenses and helps in keeping control of expenditures, managing cash flow, measuring trading measuring success  It also ensures that money spent is not wasted.

1/4/116  If you are expecting to use trading to add to your income, retire early, quit your job, then you need a business plan.  Then these may be your goals  How much will you need to make on a annually, monthly, weekly and daily  How are you going to create income; Stocks, Options, currency?

1/4/117 Business Plan Elements  Mission Statement Describe why you are building this business. Are you adding income? Retiring early? Changing your profession? Something else?

1/4/118 Simple Example Statements  This business has been developed to add to my retirement savings.  This business has been developed to pay for my child’s education  This business has been developed so that I can leave a profession that I no longer want to pursue

1/4/119 More complete Example Statements  I’ve developed this business so that I could leave my profession.  I want to be able to spend more time with my family and my community.  Education is important to me and I will be sending the first of my two children to college within 4 years. I don’t want cost to be an issue.  Within 5 years, this business will fund the procurement of a vacation home.  I what to be able to participle in community and charity activities that I was not able to with my previous profession including, PBS fund drives, Red Cross activities and my children school activities

1/4/1110 Key points of a Mission Statement  Be as specific as you can.  Personalize it to your goals for the business  Remember to put a time frame on it  If you are building it with a partner, then make sure that you both provide input and agree on it  Share it with others and use it as a means of communicating why you are spending time and energy on the task

1/4/1111 Key points of a Mission Statement Skip Griffin has developed and excellent example:

1/4/1112 Business Plan Elements  Funding / Working Capital Where are you getting the money to fund the enterprise? Savings IRA Income from a job Loan

1/4/1113 Business Plan Elements  What are your expenses? Weekly Monthly Quarterly Annually  Don’t forget, insurance, savings and taxes or benefits that you job currently cover Can’t know how much you need to make if you don’t how much you are spending

1/4/1114 Business Plan Elements There are many tools that can help you to determine where your money is going. I use Quicken to figure out my Mandatory as well as discretionary spending.

1/4/1115 Business Plan Elements

1/4/1116 Business Plan Elements Budget worksheets Household Budget Worksheet GRS Budget Worksheet Personal budget spreadsheet

1/4/1117 Business Plan Elements  Monthly Estimated Revenue Based on your expenses, how much each month do you need to make?  Now figure on a daily, weekly, monthly and annually what your cash flow is going to be.  What will be your types of income? Short Term, Mid Term, Long Term  What will be your income sources? Stocks Indexes ETF Options  Types, directional, spreads, complex Currency

1/4/1118 Business Plan Elements  Business Growth (appreciation) Business growth is the measure of profit and growth of working capital. Growth = ( liquidated investments + revenue) – (operating expense + cash reserve + employee program)

1/4/1119 Business Plan Elements  Breakeven point At what point have you met your goals? This is called your breakeven point. This is a major milestone where the revenue is greater than the operating expense

1/4/1120 Business Plan Elements  Target Growth; 1 Year Percent growth expected from working capital Specify the Strategies used for obtaining the targeted growth. Stocks Indexes ETF Options  Types, directional, spreads, complex Currency

1/4/1121 Business Plan Elements  Target Growth; 5 Year Percent growth expected from working capital Specify the Strategies used for obtaining the targeted growth. Stocks Indexes ETF Options  Types, directional, spreads, complex Currency

1/4/1122 Business Plan Elements  Re-investing in growth Budget for investing tools  Classes  Conferences  Subscriptions  Computer upgrades  Internet Employee Growth Expanding Business  Diversifying

1/4/1123 Business Plan Elements  Cash Reserves Emergency Funds Savings  Taxes Differences in taxes Stock vs. Options Incorporate or not Estimated tax payments Tax advisor

1/4/1124 Business Plan Elements  Employee / Community Programs Employee retirement Employee Scholarship Programs  Diversifying As the business grows seek out additional avenues of investments that generate a reliable as steady cash flow usually at expense of lower return. Examples are real estate and franchises

1/4/1125 Recommended Books  Eat that Frog, Brian Tracy  The five Major Pieces of the life Puzzle, Jim Rohn  The Four Laws of Dept Free Prosperity, Blaine Harris and Charles Coonradt  Rich Dad Poor Dad, Robert Kiyosaki  Cash Flow Quadrant, Robert Kiyosaki

1/4/1126 Recommended Books

1/4/1127 Any Questions?