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              PROFIT PLAN PLANNING TIPS - January, 2003

January Contents:

Importing Industry Data From RMA Statement Studies - 2002

QuickBooks Premier 2003 Ships an Incompatible System Component

Sample Project: Introduction to Writing up Project Financials - (Part 10)

Topics Coming in the Next Issue

With the new year, many of you will want to compare last year's industry ratios with the latest (2002) results.  Did the Gross Margin improve for the rest of the industry but not for you?  Has the industry shifted towards heavier debt use in this period of ultra-low interest rates?  Etc.

For those of you with access to the RMA Statement Studies CD, you can check out these questions relatively easily.  But RMA chose to alter their export process in two ways that will prove to be a minor annoyance after exporting the data from the CD-ROM.  We will adjust Profit Plan v2003 to handle this, when released, but for now...

Here is what RMA changed and what to do to compensate.  It's really pretty easy.

• RMA changed the default file name extension they assign to the export file.  They used to provide a default extension of ".txt" for the end of the export file name.  So Profit Plan searches for files ending with ".txt".  But now RMA has changed the extension name to ".csv" instead.  Fortunately, they do not force you to use the ".csv" extension.  So simply type in a ".txt" to avoid conflicts.

• More importantly, the first record (text line) in the export file now repeats the SIC code for some internal RMA purpose.  But to insure you are importing a valid RMA file, Profit Plan looks for a specific pattern in the data.  With the extra SIC code on the line, Profit Plan will not recognize the file as valid and will refuse to import it.

So what to do differently when exporting/importing?

1. First, remember to add the ".txt" when entering the export save file name, (This is not critical.  You can replace a default ".csv" with the old '.txt extension with Windows Explorer later, if you forget.)

2. Now open the exported data file using Notepad or Wordpad.  (Available in any Windows system from the Start / Programs / Accessories menu.)  The first line in the file will look something like:
   
   " SIC: 1731 1731P - ELECTRICAL WORK - Sales","1-10MM"," ",
   
   Remove the second RMA designated "1731P " from the line by backspacing over those characters.

3. Since you are editing this line anyway, add 2002 between the last two quote marks.  This will permanently inform Profit Plan that the data in this file is for the year 2002, should you forget, or someone else imports it again later.  The final result is:
   
   " SIC: 1731 - ELECTRICAL WORK - Sales","1-10MM","2002 ",

4. Exit Notepad and save the changes.  It's ready for import!

Windows applications are typically built using many building blocks called "dynamic link libraries" or "DLL's.  These contain sets of procedures or functions that can be used over and over by different applications, often at the same time.

Every once in awhile, someone makes a version change in one of these files that is not compatible with all releases in the field.  That has happened with a text control we use in our BizPlan module and QuickBooks has added into their Premier 2003 release.  The bottom line is:

If you install QuickBooks 2003 on the same PC as your copy of Profit Plan, Profit Plan will no longer load and run!

Nice, huh!  After some testing, we finally found the culprit is a replacement TX32.DLL that QuickBooks installs into your Windows/System folder, replacing the Profit Plan compatible version with one of their own.  Nothing intentional, we're sure.  Just an unexpected result of how this component has been licensed over time.

While we work with the component manufacturer to resolve this issue, there are two work arounds available.

1. Move one of the applications to another computer, if practical.  

2. Use this link for detailed instructions on how to download and restore the original TX32.DLL.  This worked successfully for us and appears to have no effect on any standard QB features.  But this should be considered a second choice stop-gap measure to be used only if it is not possible to install the applications on separate PCs.  It is generally  not desirable to mix component versions on the same PC.
    

We hope you have followed along with this project plan thus far. Each step in the project builds upon the last, so some portions of it may be difficult to follow if you missed the last four issues.  If you did miss them, please detour to the Projects and Economic Order Quantities section of our March issue.  There you will find some key concepts... project planning, planning items, non-financial assumption types, the BizPlan "Project Financials" window, and more.  Then follow on to the April issue, where we added cost of sales considerations and developed a new Gross Profit for the firm with and without the garden sheds project. In the May issue , we then added basic inventory and applied an EOQ formula to purchasing.  In the June issue, we followed this by considering reorder points and impacts on Accounts Payable.  In the July issue, we completed our initial strategic plan and linked it to the Monthly Assumptions sheet.  In August we began work on the resulting monthly budget in earnest.  By September we had derived Inventory requirements from lead time constraints and forecasted demand.  In October, we looked at the resulting Accounts Payable and noted we would probably experience a brief peak summer need of up to $500,000 to finance the project's startup expenses.  And in our last issue, we briefly explored the BizPlan module's Project Financials window so we would know where to look for information as we began writing up our "Garden Shed" project.  

For those of you who didn't actually work through the discussion last month and would like to follow along this month, take the time to download last month's partially complete Supply Project - phase 9.zip model and open it up in Profit Plan now. (You will need Profit Plan v2001 Build 1350 or later to load it properly.)

This month we will see how to use the Topics Outline, Topic Issues, and Sample Text windows in the BizPlan module to begin developing a show 'n tell that will insure we have the $500,000 credit line available to finance the startup costs of adding our new Garden Sheds line to our retail offerings.  "Why so much?", you ask yourself.  Let's see if we can develop a cogent presentation that convinces ourselves, informs our employees, and satisfies our potential lenders.

The picture below captures our sample project as we left it in our last newsletter.  Now let's begin putting flesh on this topic in detail.

I.   Selecting the Planning Horizon

The Garden Shed project is going to generate fairly significant short term swings in our need for external financing.  What we need to do now is to tell those who need to know the when, how, and why of the project in terms of Months, rather than Years.  

The Project Financials pane in the Biz Plan module reflects whichever planning horizon is current in the rest of the model.  In this write-up, we will need the Monthly Project Financials.  So if you are not seeing a monthly schedule, such as depicted above, be sure to switch to the Monthly View.  The easiest way is to click the Assumptions main tab, the Monthly schedule tab with the Assumptions window, and then return by clicking the Biz Plan main tab.

Almost all projects will be written up with data beginning in the Monthly view.  When longer horizons are needed, simply switch to the Annual view and return again.  Only the Project Financials are horizon dependent.  The write-up window itself is not.

II.  Navigating in Biz Plan

The Biz Plan module contains three main windows; the Planning Outlines window on the left, the Your Plan window in the lower right, and a tabbed window in the upper right that contains three panes:  the Topic Issues pane, the Sample Text pane, and the Project Financials pane.

The  three main windows in the Biz Plan module can be resized as necessary to provide optimal viewing.  To expand and contract the windows, hover your mouse cursor over the vertical or horizontal window frames separating them until the cursor turns into vertical or horizontal line with two opposing arrows.  Then click the left mouse button and drag the frame as desired.

To work in one of the windows, simply click inside it.  To view a specific pane in the upper right window, click one of the three tabs at the  top of the window.  To work inside on of these tabs, select the tab and click within the pane.

When you want to load or print a specific pane, click it first so that Profit Plan knows that it is the one in which you are interested.  Profit Plan will then adjust the menus so you can tell what you can and cannot do within that pane.

III.  Topic Outline Selects Topic Issues

The Planning Outlines window is an index into the Topic Issues pane.  This pane contains outlines for a generic Project Plan, a Summary Business Plan, a Comprehensive Business Plan and a Loan Request.  These outlines vary primarily with the audience targeted and the results desired.  For instance, a Loan Request focuses on specific terms and conditions desired, followed by the reasons it should be considered and is targeted to a financial audience.  A Project plan is less formal and oriented more towards internal management consideration on operations within the firm, as well as the financial rational for undertaking it.

Clicking a topic in the Planning Outlines opens the Topic Issues pane and automatically selects the related section in the Topic Issues pane.  In addition, clicking an item in the Planning Outlines panel also exposes or conceals the topic details outline within the pane.  Use this feature to arrange the outline as you wish, to expose the topics more germane at any given moment.

Whenever you create a new project from the Assumptions main tab, a new project is inserted into the Topics Outline and a new Project Financials sheet is inserted into the Project Financials pane.  Adding the new project to the Topics Outline helps you keep track of which projects you have created.  Selecting the project's tab in the Project Financial's pane lets you review the concepts, dates and estimates that went into valuing the project.

Preparing the "Your Plan" window

To begin the write-up process for our topic, first click the topic name in the Topics Outline.  In our case, the topic is "Add Garden Shed Product Line".  Clicking this automatically selects the Topics Issue in the adjacent window and aligns the topical outline within it to the Project Plan topics section.   Now we are ready to use a little copy/paste to prepare the Our Plan window for our new project plan.

In the Topic Issues pane, place your mouse cursor to the left of "Title Page".  Now hold down the left mouse button and drag the mouse cursor down the outline to just above the next major topic section (identified in a large double-lined box).  This selects the outline.  Now copy it to the Windows Clipboard by pressing [Ctrl][C}, or using the Edit / Copy menu option.

Next, close most of the Topic Issues window by placing your mouse cursor above the horizontal window frame below the topic issues pane.  When the mouse cursor turns into a horizontal bar with up-down arrows, the cursor is in the correct position.  Now depress the left mouse button and drag the window frame up until only about three lines are left exposed in the Topics Issues pane.  This will give us more room  to work in the Your Plan window.

Now, in the Your Plan window, let's get rid of the existing text and replace it with the project plan outline currently on the clipboard.  We'll leave the titles for the moment, so place the mouse cursor at the left of the first word in normal text size.  If you are looking at the "Year through Year Business Plan" overview, the first few words we will want to remove will be "You can use this ..."  

Hold down the  left mouse button and drag to the bottom the existing write-up, so all the main text is highlighted.  Then press [Ctrl][V] or use Edit / Paste to replace the existing text with the outline.  Now we can simply edit the outline as we prepare a write-up for management and our employees.  Its goal is to insure that everyone understands the project, is in tune with the reasons and goals, and can contribute their feedback, constructive suggestions and critiques.  The results of this process will undoubtedly strengthen the plan and sharpen our ability to prepare a follow-on loan request if necessary.

IV.  Project Plan Title Page

Now let's set up the title page, as suggested in the project outline.

Since the current title fonts will be fine for our purposes, let's take advantage of the fact that the text editor will repeat the existing font style for characters inserted into a word.  So place the cursor after the first "Y", in the "Year through..." title and enter

"Johnson Industrial Supply"

Then highlight the remainder of the original title and press [Delete].  We don't need it.  Finally, press the [Home] key to return to the left end of the title, and then the [Delete] key to get rid of the "Y" we used for a font template.

Now let's insert the company address, as indicated by the outline.  First press the [End] key to return to the end of the company name and then press enter.  The cursor positions itself to the center of the line, indicating that this new line will also be centered on the page.

Enter our company address:

"1234 Main Street"
"Anywhere, ST  98765"

Since the address is known by most already, let's reduce the font size to 8 points.  To do so, drag from the "1" in "123.." over and down until the address is highlighted.  Then select the font size drop-down list (in the toolbar, to the right of the "Arial" font name) and select 8. Voila.  The address is centered and appropriately sized for our page.

Using the same trick of preserving font styles as before, let's enter our project title into the existing "Hints on using..." subject block.  To do so, place the cursor to the right of the "H" in "Hints" and enter:

"New Garden Shed Product Line"

Now highlight to the end of "module" and press the [Delete] key to get rid of the old subject.  Then go back and delete the old "H" still remaining at the left of the project title.

The final text line called for in the title page section of the outline is the date.  Let's add this a couple of lines below the subject (project title) and make it look much like the address lines.  This time, we will set all the font conditions, just so you know how it was done originally.  (There is nothing special about how this page has been set up really.  Make your own as simple or fancy as you wish.)

Place the cursor on the line below the project title and press [Enter] to open a new line.  Enter

March 23, 1987

(Yes this plan has been around awhile!)  Now the "B"old button on the toolbar is depressed, the font name showing in the toolbar is "Arial" and the font size is shown as "10".  Obviously, the color is black, not blue, so we will need to change that.  But what about the rest of the settings used for the address?  

To check, let's click on the address itself and observe the settings in the toolbar.  OK.  The font size and name are the same as in our date line.  And the "B"old button is selected.  But so is the "I"talic button.  And we note that the centering button is also selected.  So now we know what we need to set so that the date line will mimic the address lines.  Let's do it.

Select (highlight) the entire date.  Click the "I"talic button, the centering button, and then the drop-down arrow to the right of the "A"lphabetic (text) button.  Finally, click the Blue option to recolor the text.

V.  Finishing the Title Page

Our title page is finished, so let's now delete the title page outline.  We won't need it again.  (Even if we did, we can find it in the Topic Issues pane whenever we wish.)

To delete the title page outline, select (highlight) from "Title Page" down to the line above the "Table of Contents" portion of the topic issues outline.  Press the [Delete] key.  (If you selected the wrong stuff, you can undo the last thing you did by using the Edit / Undo option, the Undo button on the main toolbar, or by pressing [Ctrl][Z].

Finally we will want to insert a Page Break so that our table of contents will follow on page 2, when we print this plan write-up.  

To insert a page break, place the cursor after the last character you wish to appear on the page.  Then press [Ctrl][Enter].  A dotted line will appear, indicating the end of a printed page.

To see how the document will appear on the printed page, select the Print Preview button.  It appears this will be a bit too high on the page, so let's move it down.  The easiest way is simply to go to the top of the page and press the [Enter] key several times.  Then check print preview again.

In addition to using Print Preview, you can also use the View / Page View menu option.  This simulates typing on the printed page by inserting gaps between pages and printer margins around the page.

The picture below shows where we are leaving the write-up for this issue.  You might notice from the Planning Outlines below that we have also added an "Optional On-Site Delivery" planning project to our model.  While just for expository purposes here, you will often find that working through one project gives birth to others.  Just what happened to us today!

You can download a current copy of our Johnson Supply Project - phase 10.zip model from our web site if you wish.

In this issue we focused on mechanics; how to navigate in the Biz Plan module and how to use the text processor.  In the process, we have migrated the suggested topic outline into the Your Plan window and set up our title page.  Next issue we will spend a bit more time considering our target audience and lay out the definition of our project for presentation..

These newsletters are one more way we at Security Development Corporation can say "Thank you!" for being one of our valued Profit Plan® clients.  We hope you find that each issue of our Profit Plan newsletter contains at least one nugget of information that will help you better plan and manage your business processes. But, if you prefer, simply click the word Cancel to unsubscribe from this newsletter.

Copyright 2003 -- Security Development Corp.
10406 - 40th Avenue SE
Everett, WA  98208 USA
tel:  (425) 483-0850
fax: (425) 483-0683
email:  newsletter@profitplan.net