As a small business owner, you recognize the importance of your business plan. It outlines the course of your business, how you plan to make money, cover expenses, market yourself and grow as a business.
An integral part of your business plan is the financial business plan. This spells out everything related to specifics of finances and your business. This financial plan for your business encompasses all the documents and plans related to the money side of your business.
Read on to learn all the parts of your business financial plan.
1. Income Projections Or Income Statement
The income statement is one of the most important parts of your financial business plan. It outlines three important pillars of your business: profits over a period of time, expenses, and revenues.
Your financial planner, like IMTAAA Brisbane Financial Planning, can help you to organize this key part of your financial business plan.
2. Cash Flow Statement And Projection
This part of the plan shows the flow of cash into and out of your business. It outlines how much cash you have coming into the business over a period of time. It also shows how much cash goes out because of expenses.
This helps your business to see if you need to work to increase revenue. It might also show if you need to cut down on your expenses to increase the cash balance.
3. Balance Sheet
This third part of the business financial plan is the balance sheet. It shows how much net worth your business has. It shows these in your:
- Assets
- Liabilities
- Equity
These terms work together to show your net worth. Your liabilities are subtracted from your assets to show your liabilities.
4. Expenses Budget
The expenses budget is important as it shows how much it costs to make your product or run your business. The expenses might come in the form of equipment or materials. They might also come from employee or site costs.
The expenses tell you a minimum number it will take for your business to be solvent and go to making money.
5. Sales Forecast
The sales forecast does it exactly what it says, it forecasts the sales your business will have. This forecast should cover a three year period.
For the first year, the sales forecast should show sale projected sales by the month. After that, the forecasts can be done quarterly.
For established businesses, previous sales information should be used to create a sales forecast.
6. Personal Financial Statement, Federal Tax Returns
If you anticipate the need to borrow money for your business, you need to show your personal financial picture. This should show your overall net worth as well as your debts.
The tax returns show your true financial picture. It also gives a potential lender your capacity to repay loans you might acquire for the business.
7. Overall Business Projections
Like the sales projections, use three years worth of information if it’s available. You use three years worth of expenses gathered from previous balance sheets. You include income statements and cash flow from the last three years.
You might consider your most recent year’s expenses the most closely. They might show how your business has grown and invested in additional assets for the business. Using all these data points, allows you to paint a picture of your business going forward.
Get Your Financial Plan For Business Success
A financial plan for your business is key to future success. It helps you, as a business person to outline on paper all the financial working parts of your business. With a financial planner, you can look to the future and help your business to grow and prosper.
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