Your business plan will include a Financial Analysis of your business. When you are writing this section it is best to enlist the help of your business accountant or an experienced financial professional to help you put together an in-depth, structured account of your businesses financial assessment.
Your business plan Financial Analysis should include:
- A balance sheet including all of your business assets, liabilities and equity. It will also include your assumed and projected financial information.
- Cash flow forecast of anticipated sales. You will need to accurately demonstrate the amount of money coming in on a regular basis minus the expenses you will pay out to give your reader an indication of the cash on hand for operating your business and future growth.
- Profit and Loss statement and forecasts. This is a report of total revenues generated minus all of the costs of operation over a specified amount of time. This is typically calculated quarterly or for the fiscal year.
- Your Break Even Analysis will demonstrate at what point your business will be self supporting and all costs of operation are covered by the business itself.
- Personnel Expendances should be included in the financial analysis. The cost of current management and employee salaries needs to be included as well as a forecast for growth for the next 3-5 years.
The financial analysis section of your business plan is the most important section when it comes to access any funding you may need to assist you in getting your business moving forward. It is also one of the most difficult portions of the business plan to write. You will need help with this because much of the information provided is based on educated guesses and assumptions.
If your business is just starting out or has not opened for business yet, how do you predict what your finances will be? You will need to consult with financial experts who are experienced in doing forecasts and assumptions.
Consistency through the business plan is critical when it comes to making your assumptions and forecasts believable. Go over all sections of the business plan that you have already written and extract all financial clues from them to incorporate them into your financial analysis.