In this portion of your business plan, you will be supplying financial information pertaining to all aspects of your company. This section shows that your business idea is viable and practical. It is crucial in determining if your business plan is going to be able to attract any investment in your business idea.
If you are not financially acute, find someone who is to help you with this section of your plan.
The goal here is to identify and implement policies that will meet financial obligations. Plan a sound, realistic budget. Determine what your start-up costs will be as well as your operating budget.
Your start-up budget includes only one-time costs, such as licenses, permits, start-up equipment, down payments, personnel costs (prior to opening), etc.
Your operational budget should include all your expenses that you will incur maintaining your business. These costs include rent, payroll, utilities, dues, subscriptions, fees, advertising, legal costs, insurance, etc.
If you are starting a new business, and writing your business plan to acquire funding, you will need to forecast your financial needs. Your financial documents should cover a span of the next 3-5 years, broken down into monthly increments.
Remember to keep your forecasts realistic. You cannot get funding for your business if your financial forecasts are unrealistic and unworkable. The old adage applies in this case: hope for the best, but plan for the worst.
Key documents for your financial plan:
Your company's balance sheet shows all the company's assets, liabilities, and retained earnings. It indicates what the cash position of the business is, and what the owner's equity is at any given point in time.
This document shows the volume of revenue from sales that are needed to balance the fixed and variable expenses. The break-even analysis is based largely on the income statement and cash flow.
The income statement is sometimes referred to as the profit/loss statement. It indicates how well the company is managing its cash by subtracting disbursements from receipts.
Cash Flow Sheet
The cash flow projection shows how cash is expected to flow in and out of your business. It let's you know when your expenditures are too high or when you might want to arrange methods to deal with a cash flow surplus.
The cash flow projection offers evidence to lenders that your business is an acceptable credit risk.
Additional Information to Include
Be sure to also include any loan applications you have filed for, and address what you will provide as an accounting system and inventory control system.
At the end of your business plan, provide all relative supporting documentation that applies to your plan and to any statements made.
This portion of your business plan is basically an appendix of resumes, credit info, quotes and estimates, leases or buy/sell agreements, census/demographic data, and any other legal documents that are relevant to your business plan.
It is a good idea to include letters of intent from prospective customers and letters of support from credible personal references.
Mr. Oliver is a marketing agent of the Small Business Advocate. The Small Business Advocate, is a champion for small business and provides national expertise concerning small business. For more information on this Small Business Expert please visit their website.