The Financial Plan, part of writing a business plan, concentrates on your financial performance, your financial position and cash flow and how to forecast this information. This is a crucial part of the Business Plan, especially for a small business.
Financial Planning
Finance Planning, although scary for some, is extremely important to a new or existing business. This plan puts together all of your quotes and financial information that you will have gathered in setting up or operating your business. This information is then combined into a plan to look at how financially viable and profitable your proposed business is.
Financial Assumptions:
Remember – for any financial forecast, you must make detailed notes of the assumptions you made in arriving at your figures. Especially important if you are going for financial backing.
Why? It adds credibility to your forecast, and people will know exactly why you have chosen the figures you have listed. It helps to keep the forecast open and honest.
Also, if you need to tweak the plan in the future, change some of the criteria, you will have a good reference source as to your original assumptions.
Financial Reports
Statement of Financial Performance
The Financial Performance Forecast or Budget is an overview of business activities over a period of time. It looks specifically at the income and the expenses and resulting profit or loss.
Cash Flow Forecast
It is very important for a business to make sure that there is enough cash flow to meet needs. It is therefore vital that the business projects a monthly outline that shows cash going in to the business and out of the business. This will help plan for any shortfalls. It is vital that a business has enough cash in the bank to cover all payments.
Statement of Financial Position
The financial position shows you, as a business, what assets and liabilities you have and where they are. It will tell you also how much money you owe. This statement is especially important if you are looking for financing.
Analysing Financial Reports
Once you have drawn up your Financial Position, Financial Performance and Cash Flow Projection you will have a really good picture financially of your business. The next step is to establish what these figures are telling you.
Go to the top of the
Financial Plan
page, or return to
Writing a Business Plan
