Write your business plan

 

how to write a financial plan for a business plan

A financial plan is the heart of any startup or existing business. It is a culmination of the income statement, the cash-flow projection and the company's balance sheet. The financial plan is a way to look at a business through a financial lens, which is the view most investors prefer. When preparing a financial. Mar 20,  · The income statement is one of the three financial statements that you need to include in the financial plan section of the business plan. It shows your revenues, expenses, and profit for a particular period - a snapshot of your business that shows whether or not your business is profitable. Revenue - Expenses = Profit/Loss. Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template. Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template.


Business Plan Essentials: The Financial Plan


In this edited excerpt, the authors outline what type of information you should include in the financials section of your business plan.

Astute investors look carefully at the charts, tables, formulas and spreadsheets in the financial section because they know this information is like the pulse, respiration rate and blood pressure in a human being—it shows the condition of the patient. Financial statements come in threes: income statement, balance sheet, and cash flow statement. This information is very important to business plan readers.

You can typically gather information and use Excel or another financial program to create your spreadsheets. You'll also find them available in most business plan software; these programs also do the calculations.

An income statement shows whether you're making any money. It adds up all your revenue from sales and other sources, subtracts all your costs, and comes up with the net income figure, also known as the bottom line.

They can get pretty complicated in their attempt to capture sources of income, such as interest, and expenses, such as depreciation. But the basic idea is pretty simple: If you subtract costs from income, what you have left is profit. The most important question to ask is: What has been the experience of similar companies? It adds up everything your business owns, subtracts everything the business owes, and shows the difference as the net worth of the business.

Actually, accountants put it differently and, of course, use different names. The things you own are called assets. The things you owe money on are called liabilities. And net worth is referred to as equity. A balance sheet shows your condition on a given date, usually the end of your fiscal year. Sometimes balance sheets are compared.

That is, next to the figures for the end of the most recent year, you place the entries for the end of the prior period. This gives you a snapshot of how and where your financial position has changed. Balance sheets can also be projected into the future, and the projections can serve as targets to aim for or benchmarks to compare against actual results. Balance sheets are affected by sales, too. If your accounts receivable go up or inventory increases, your balance sheet reflects this.

And, of course, increases in cash show up on the balance sheet. The cash flow statement monitors the flow of cash over a period of time a year, a quarter, a month and shows you how much cash you have on hand at the moment. The cash flow statement, also called the statement of changes in financial position, probes and analyzes changes that have occurred on the balance sheet.

A cash flow statement consists of two parts. One follows the flow of cash into and out of the company. The other shows how the funds were spent.

The two parts are called, respectively, sources of funds and uses of funds. At the bottom is, naturally, the bottom line, how to write a financial plan for a business plan, called net changes in cash position. It shows whether you improved your cash position and by how much during the period. Applying business data to other ratios and formulas will yield important information on what your profit margin is and what level of sales it will take for you to reach profitability.

These bits of information are helpful to you as well as to investors, it should be noted. Understanding and, if possible, mastering them, will help you run your business more smoothly. Image credit: Shutterstock. The Staff of Entrepreneur Media, Inc. Entrepreneur Staff. January 4, 6 min read. More from Entrepreneur. Learn to be a better leader and develop successful marketing and branding strategies with Dr. Patti Fletcher's help.

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How to Write a Financial Plan | Bizfluent

 

how to write a financial plan for a business plan

 

Second, the business plan is a requirement if you are planning to seek loan funds. It will provide potential lenders with detailed information on all aspects of the company's past and current operations and provide future projections. The text of a business plan must be concise and . Mar 20,  · The income statement is one of the three financial statements that you need to include in the financial plan section of the business plan. It shows your revenues, expenses, and profit for a particular period - a snapshot of your business that shows whether or not your business is profitable. Revenue - Expenses = Profit/Loss. An outline of your company's growth strategy is essential to a business plan, but it just isn't complete without the numbers to back it up. Here's some advice on how to include things like a sales Author: Elizabeth Wasserman.