How to Create a Financial Business Plan || Tukesomalism.com
Your financial business plan is an essential component of your entire business plan. It is calculated after you have finished conducting market research; described your products, services and marketing strategy; and set your organization’s operating principles in place. Any other items that pertain to your business as an expense should be defined before you set out to create your business financial plan. The goal is for you to be able to operate your business on a predefined budget, so there are no hidden or undefined costs that may threaten your business operations over a certain period of time.
Step 1Estimate your start-up costs if you are starting a new business. If you are investing in equipment to run the business, the current market value will become a part of your assets listed on your balance sheet. If you own an existing business, start-up costs will not apply; go to the next step.
Step 2Figure your balance sheet. If you are starting a new business, project your balances per month, forward to one year. If you own an existing business, gather up your balance sheets for the last three years. Website links to automated templates for the balance sheet, income statement, and cash flow statement are available online.
Related Reading: Developing a Financial Plan For a Small Business
Step 3Figure your income statement, also known as your P & L statement or profit and loss statement. If you are starting a new business, project your income statement forward to one year. If you own an existing business, gather up your business income statements for the last three years.
Step 4Figure your cash flow. If you are starting a new business, project your cash flow per month, forward one year. If you own an existing business, gather up your cash flow statements for the last three years.
Step 5Include your current personal financial statement if you are applying for a loan. A lender needs to know your personal net worth based on obligations and other personal debt. This is in addition to identifying business obligations for loan considerations.
Step 6Include your federal tax return for the previous year if you are applying for a loan. The lender wants to see a true, non-projected income reflecting your personal capability to repay a new loan or actual business sales and profit and loss indicated on your Schedule C form.
Set forth new projections if you own an existing business. Take the monthly average of the last three years of expenses when projecting for your balance sheet, cash flow and income statements. Also take into account the previous year’s expenses more than the others, since this year may reflect new expenses based on modifications due to business growth.
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