The Statement of Financial Position section of the Financial Plan, is part of the Business Plan which concentrates on your current financial position. This is a crucial part of the Business Plan, especially for a small business.
Where are you positioned financially now?
This statement 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.
This statement includes the following information:
ASSETS
This is all that your business owns that has a monetary value. You need to know how much each asset is worth, and how quickly could you sell it. Current Assets you can dispose of quickly, say within 1 year. Fixed Assets take a lot longer to sell.
A. The Businesses current assets
These can include things like case, investment portfolio’s, accounts receivable, your inventory or stock, prepaid expenses, such as insurance premiums or retainers.
B. Fixed Assets
These can be things such as land, buildings, equipment and machinery less depreciation.
C. Intangible Assets
Intangible Assets are things that you can’t see such as Good Will, patents, contracts such as franchises etc.
LIABILITIES
The liabilities are all that your business owes, the debts and obligations you have. Depending on whether they are Current Liabilities or Long-Term Liabilities will depend on how soon you need to pay them off.
A. Current Liabilities
These are your short-term debts, again lets say within one year, so you have to be able to cover these with your current assets. Remember:
Current Assets – Current Liabilities = Working Capital
Examples of Current Liabilities include Accounts Payable and accrued expenses payable, short term loans etc.
B. Long Term Liabilities
These are where outside parties have a claim on your business and are longer term than the current liabilities. For example mortgages or long-term business loans.
C. Owners Equity
Total Assets – Total Liability = Owners Equity
Examples of owners equity can be invested capital or earnings that have been ploughed back into the company.
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Financial Position
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Financial Plan
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Writing a Business Plan
