This is the sixth part of a Ten part series on business planning which you can join at any time. To start from the begining sign up for the Free Weekly Business Planning Series and recieve a blank business outline too!
As you drive along, your car’s gauges give you up to the minute feedback on your progress. The gas gauge tells you when it is time to stop and re-fuel. The same is true for the financial statements in your business.
Bankers expect entrepreneurs to be optimistic and overestimate sales projections. Be sure to substantiate how your projections were developed.
The financial plan should contain only summary data. Include:
- Forecast – Do you have firm orders for your products or are you already
selling your product?
- Financial Statements – At a minimum, you must include the income statement,
cash flow, and balance sheet. A three-year forecast and some discussion of
best- and worst-case scenarios also should be included. For an existing
business, at least two years’ history should be included as well. Ratios
make relationships in your business more understandable, giving you a focal
point for your analysis.
- Financial Requirements – How much money do you need for startup?
- Calculate your break even point. How many units must you see before the business begins generating a profit?
- Talk to an accountant – not a bookkeeper, someone who can help you review your financial assumptions. (Here in Indy I reccomend Larry Marietta)