Tag Archives: business expenses

Business Plan Marathon Again … and Your Profits Are Still Way Too High

This morning I start my annual business plan marathon. This is my day as a semi-finals judge at the University of Oregon’s New Venture Championship. From here I go to Houston next week for Rice University’s million-dollar business plan competition, and then in early may to Austin for the University of Texas’ Venture Labs competition. winners The illustration here is from last year’s competition at Rice.

I call it my business plan marathon because it includes reading several dozen business plans and watching several dozen business pitches. It also incudes reading some plans for the University of Notre Dame business plan competition, and plans submitted to the Willamette Angel Conference, where I’m a member investor. All of this happens between now and May 12.

I do enjoy reading business plans, and I enjoy even more meeting the entrepreneurs, watching them pitch, and asking questions. These events are good for everyone involved.

As I was reading plans in preparation, I found that one error I’ve complained about before — the totally unrealistic profits — is still quite common. Way too many of these business plans project profits at 40, 50, 60% and even higher, as if the way to show a good business is to project very high profitability.

The extremely high profits in the projections leaves me very unimpressed. Real businesses are happy to make 5 or 10% profit on sales when they do real well, maybe more when they are new, innovative, and spectacularly profitable. Nobody makes the high rates that show up too often in business plan contests.

Those sky-high projections don’t mean you have a great business plan or a great business; no, what they really mean, to me at least, is that you don’t really know the business you’re getting into. You don’t have a good grasp of normal costs and expenses.

Business Owners: How do You Treat Employees Who Travel

Business travel is tough. It’s a parade of hotels, airports, taxis, deadlines, delays, time zones, and all that. So I ask you, business owners, how do you treat your employees when they travel:

  • Can they deduct the cost of a session at the gym in the hotel?
  • Can they buy a movie at the end of a long day?
  • Do you cover their full costs of meals?
  • Do you let them keep their miles, their hotel points, and other similar perks?
  • Can they take a taxi, or do they have to deal with the shared airporter vans?

Here’s the thing: business travel is hard. It takes people away from their normal life. Delays are common, jet lag is common, and while it may not be work to sit on a plane and wait at the airport, on off hours and weekends … it certainly isn’t fun. There are a lot more hours spent on the job than just the working hours.

The tax code is a problem. The government unfairly (in my opinion) limits the deductibility of some of the associated expenses. But what do you do for them? Do you accept those expenses? Should you?

(Image credit: Tyler Olson/Shutterstock)