Learn why the financial section of the plan is so important, and get tips on what information to include.
This information helps you determine how much financing your business needs and helps outsiders determine whether lending you money or investing in your business is a wise use of their funds.
You'll probably also want to note any personal seed capital your business has, or will have. Financiers want and often require entrepreneurs to put their own funds in the venture, and the greater the portion you commit relative to your net worththe better.
You must also determine which type of financing would be most suitable for your business. Banks offer several types of loans to businesses that do not present too much risk.
Do you need a short-term working capital loan to increase your inventory? Do you want a transaction loan, with which you receive all the money at once, or a line of credit that lets you draw on funds as you need them?
Do you need an intermediate-term loan to purchase larger assets such as real estate or equipment? Or are you a high-risk business that needs to jump through the extra hoops required to secure a government-backed Small Business Administration loan?
Structuring Your Financial Plan Begin your financial plan with information on where your firm stands financially at the end of the most recent quarter what its financial situation has looked like historically.
Then lay out your goals with financial projections for the next three to five years, depending on what lenders or investors have asked for. These are called "pro forma" statements, and they are based on your assumptions about how your business will perform. Your one-year projections should be broken down by month, while your more distant projections can be broken down by year.
If your business plan is for the expansion of an existing business, your statements will be based on your business's existing financial data. If your business is new, your statements will be speculative, but you can make them realistic by basing them on the published financial statements of existing businesses similar to yours.
Three Key Financial Statements Your financial plan should include three key financial statements: Let's look at what each statement is and why you need it.
Lenders and investors want to know what kind of numbers your company is working with and whether your company is profitable or expects to be soon. Balance Sheet The Balance Sheet shows your company's assets and liabilities. It's called a balance sheet because the assets must perfectly balance the liabilities.
Within each category are numerous subcategories. For example, your assets will include cash, accounts receivable, inventory and equipment. Your liabilities will include accounts payable, wages and salaries, taxes, rent and utilities, and loan balances.
The Balance Sheetis important because it shows the company's financial position at a specific point in time, and it compares what you own to what you owe.Your projected financial statements should be based on: 1.
An analysis of your company’s historical financial data or the financial data of The public library is also a good source of business information for financial projections, and your business plan in general.
Most public libraries have a reference librarian who can help you locate. How to write the financial plan section of the business plan: the income statement, cash flow projections, and the balance sheet (templates included).
Planning Financial Statements and Projections Data When you develop a business plan, financial projections and cash flow analysis are among the most critical elements. New and existing businesses that need financing will have to demonstrate the profit potential of the enterprise in order to convince a lender to provide needed funding.
Web Solutions, Inc.
isp business plan financial plan. Web Solutions, Inc. is an established Internet service provider, ISP, in Phoenix, AZ, serving the small business and home office markets. This section presents our financial projections for the term of the plan. The following table provides Web Solution's projected income statements.
Basically, the financial plan section consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements.
Creating Financial Projections Modified from the following source: Dr. Stan Abraham, College of Business Ad ministration, CA State Polytechnic University.