Writing the Perfect Business Plan: Financial Plan
The Financial Plan & Projections portion of your business plan will take some work. This is because it involves a lot of projections, based off of estimates. However, it is very important that you do complete this section, both for you and potential stakeholders. By having these projections, you will be able to know how healthy you can expect your business to be. Stakeholders will be able to see if your business is worth being involved with to them.
Below are the financial statements that you should include in your initial business plan. At first, they may be all projections. However, you will periodically need to create actual financial reports.
Income Statement
Your income statement will show financial data over a certain time period (usually a year). It should include your revenue, expenses, and profit for that time period. Under each of these categories, you will be able to list more specific sections, such as materials under expenses.
Even though you may not have any financial data when you are first writing your business plan, you can create a projected income statement. Later on, you should build an actual one to see where your business stands financially.
Cash Flow Projection/Statement
Your cash flow projection will show how you think money will flow through your business in the coming year. This is different than a cash flow statement (which you should create later), which shows how money actually flowed through your business.
Balance Sheet
A balance sheet shows a snapshot of your business’s assets and liabilities at a given point in time. This statement will show how much you owe vs own and how well you are doing at a specific time.
Appendix
Although an appendix is not necessary, it may be useful to include supporting documents. Additionally, you can explain any items from your financial projections.
These financial plans may be hard to develop. However, they will help you predict the health of your business and anticipate any future needs.
