A Draw-Down Schedule Is Vital For Every Business Plan
Every business concept has brilliant ideas or elements in them. Unfortunately, great ideas are not enough to produce a great business. I have seen hundreds of great ideas, but few of those great ideas end up creating a new business because so many ‘would-be’ business owners lack either the experience or the expertise to successfully manage their great concepts into cash-rich businesses.
Go ahead and develop your business concept. Identify and consult all the professionals essential to the project [accountants, lawyers, engineers, designers, architects, builders, and trades ]. Now you will have a clear understanding of what is involved in completing the implementation of your project.
You have sourced competitive quotations on the costs each profession needs to charge for their professional work, the input of the various trades and the materials for each task and stage of the complete job. So eventually, you have brought all this information together with the scheduling plan of your project manager. Now you can place every task, stage and the corresponding cost into a timeline format.
So, the draw-down schedule brings together each task, the cost of that task or stage, and the time in which the work is to be completed. These are the 3 elements of a draw-down schedule.
When all this is completed you may now quantify the draw-down schedule, where you need to pay each contractor or professional as they complete their stages of your project.
How to do this? Create a timeline with markers at regular intervals, indicate each month of the project implementation phase. [Tip: Number the first month of project implementation as Month 1 etc. Therefore, if there are delays in starting, you don’t have to re-write the spreadsheet.]
Now locate each component of your project on that timeline, show when each piece of the task needs to begin, and when it should be ended. You may find that this is quite complex. If you’re doing this on paper it may take a few tries to finalise. This will depend upon the complexity of the project implementation.
If you’re recording the timeline on a computer you may need to re-sort the information a few times to get it all ordered. Now plot on this timeline axis a place for the expenditure for each component of the work. When this is done for every piece of the project you shall have a $$$ value for the amount of capital needed to pay for all the work. Make sure that you include the costs of accessing the investment funding, any commissions payable etc.
When you identify the amount of capital you and your fellow shareholders have in hand at the start, you shall be able to identify the point in time when you shall need to have access to an investor’s funds to continue the development program.
Now your ‘draw-down schedule’ is complete. This is a vital piece of information you need to bring to us, as we prepare your winning business plan. Your detailed work demonstrates to the investor that you understand the complexity of all the dimensions of the project, and have thoroughly prepared for the implementation phases of your new business venture.
For a quality business plan not only sells your investment opportunity to an investor, it also demonstrates your competence. The investor shall place a high value on your capability and preparedness, as they will on the profitability, or the impact of the project.
Make sure that you utilise great professionals to ensure that your great idea, becomes a successful new venture in every way!