Compiling the Financial Section of Your Business Plan
A solid financial plan should always be included within any business plan. Plans for financing the business today and allowing for future growth should be outlined in addition to ongoing operational needs. Before writing this section, spend time with your accountant, financial advisor, or chief financial officer (CFO) to review the financial structure of your intended business.
The financial section should outline:
- The amount of funding necessary to start or grow the business
- Anticipated funding required over the next two, three, and five years to maintain business operations and allow for growth
- Plans for using funds
- A timeline indicating anticipated additional funding
- If applying for a loan, loan repayment plans
Each element of your initial financing should coincide with the goals and visions of the business as stated earlier in the business plan.
The key to this section is not just the numbers, but how you arrived at your financial projections. An established business looking for additional funding has financial benchmarks from which to work. The financial projections for a startup business, however, are based on research tied closely to market analysis, marketing plans, and operational plans.
If, for example, you have overestimated your potential customer base, your projected sales figures will be inaccurate. If you have not accurately analyzed your need for marketing and promotion to gain a share in a competitive market, your financial forecasting will be skewed. Therefore, you should compile your financial section after completing all other sections, with the exception of the Executive Summary, which you will write last.
Once you have established a solid overview of all aspects of your business, as outlined in the plan, you can use projections to create your:
Cash Flow Plan Profit and Loss Statement Break-Even Analysis Balance Sheet Business Ratios Operating Costs Sales Projections
You might also consider including a market forecast to show the direction the market is anticipated to take in the next few years. Make sure you base this only on solid research and not on assumptions. Finally, in your appendix, you should include fully detailed financial documents, particularly if you have an existing business.
