What a financial plan actually is (for a real small business)
Forget the SBA template. A small business financial plan answers four questions, on one page:
- How much revenue do I need to hit, and by when?
- How much of every dollar goes to profit, owner pay, tax, and operating costs?
- What's my 12-month cash projection look like?
- What's the trigger that tells me I'm off plan?
Banks want the long document. You need the one-pager. We'll build the one-pager first — the long version writes itself once the numbers are real.
Step 1 — Set a Real Revenue target (not top-line)
Real Revenue = Top-line revenue − materials and subs passed through. A roofer doing $1M with $400k in materials and subs has $600k of Real Revenue. That's the number every percentage gets applied to. Plan against Real Revenue or your buckets will lie to you.
Step 2 — Pick your allocations (the heart of the plan)
For Real Revenue under $500k, a solid starting split:
- Profit: 5%
- Owner's Pay: 50%
- Tax: 15%
- OpEx: 30%
For trades and restaurants doing $500k–$2M, we usually run 10% / 25% / 15% / 50%. The point isn't the exact split — it's that every dollar has a job before it shows up in your account.
Step 3 — Build a 12-month cash projection
Twelve rows (months) and five columns: Revenue, Profit, Owner's Pay, Tax, OpEx. Multiply revenue × each TAP % to fill the row. Add a sixth column for cumulative Profit + Tax holds so you can see quarterly distributions and tax payments coming.
Use last year's monthly revenue as the baseline. Add a realistic growth rate (10–20% for most blue-collar shops). Don't plan for a moonshot — plan for the boring version, then beat it.
Step 4 — Stress-test it
- Slow-month test: can you cover Owner's Pay + fixed OpEx if revenue drops 30% for 60 days?
- Big-job test: if a $50k job pays 45 days late, does payroll still clear?
- Tax test: on April 15, is the Tax bucket actually big enough?
If any answer is "no," the fix is in the plan — raise prices, lower OpEx %, or build cash reserves before scaling.
Step 5 — Pick your off-plan triggers
Three numbers that tell you to stop and re-plan:
- OpEx above target % for 2 months in a row
- Owner's Pay account dips below 1 month of personal expenses
- Real Revenue down more than 20% vs same month last year
Triggers beat budgets. Budgets get ignored; triggers force a conversation.
What most owners get wrong
- Planning on top-line revenue. Materials and subs aren't yours.
- No tax bucket. Then April hits and the plan dies.
- Treating Owner's Pay as "whatever's left." It's a fixed line item, not a residual.
- One-time plans. Update the projection on the 10th and 25th — same rhythm as the cash sweeps.
The 15-minute monthly review
- Pull last month's actual Revenue, Profit, Owner's Pay, Tax, OpEx.
- Compare to plan. Note variance.
- If any trigger fired — call the meeting.
- Roll the projection forward one month.
That's the whole job. Most owners do this twice and never go back to the 30-page spreadsheet.
We build this exact plan with clients in California and Nevada — Real Revenue baseline, bucket percentages tuned to the trade, a 12-month projection wired to actual payroll, and the monthly review on the calendar. If you'd rather have it set up for you instead of building it on a Sunday, that's our whole job.
