It is thrilling to develop a plan for business success and part of that is understanding your business’ finances. This article is the fourth in a five-part series on preparing business plans. Each article has been dedicated to creating a plan for starting or running your business. At the end of the series, if you follow the articles and complete each section, you will have a complete business plan you can use to operate your business or seek financing. Each article will cover a different topic:
As was discussed in Part One, Part Two, and Part Three of this series, a business plan is a tool for gathering all the important information about running your business and your financial condition all in one place. A well-done business plan will help you run your business on a day-to-day basis according to a pre-set, well thought out, and organized plan. Even in times of unexpected crisis, a business plan is a great tool, to keep you focused, on track, and mindful of the big picture you have set for your business. This article will deal with the current financial information section of the business plan.
The financial information section of the business plan is where you set out the financial aspects of your business. In this section, start-up businesses will include start-up costs and a description of how the loan will be used. This section will provide the reader with a clear picture of your profits and losses, cash flow, and other relevant financial information. This is where you will put your balance sheet, income statement, and other related documents. The financial information section of your business plan will include the following sections:
Use of Loan Money This section applies only to those who are using the business plan to obtain financing. In this section list out all your uses for the borrowed funds as in the chart below:
|Uses for Funds||Description||$ Amount|
|Use Number 1||Explanation of first use||$0.00|
|Use Number 2||Explanation of second use||$0.00|
|Use Number 3||Explanation of third use||$0.00|
This is an opportunity for you to provide all the information investors and lenders need to show you will make good use of the money provided.
If your business is a start-up use this section to explain the costs of starting your business. This is the place where you explain what money you put into the business, where it came from, and what you used/are using it to accomplish.
Profit and Loss Statement
Any person who is considering making a loan to or investment in your company wants to see your profit and loss statement. A business needs to make money and this is where you show that your business will be a profit-making enterprise. Use this section to explain the cost of goods, operating expenses, and all other items that go into making your business operate at a profit or loss.
Cash Flow Information
Use this section to attach a detailed statement of cash flow in all your business accounts. Be sure to include beginning balance, sources of income, expenditures, and ending balances.
Attach your current balance sheets. Be sure to have explanations for current assets, liabilities, and equity.
Revenues vs Costs
Use this section to list fixed and variable expenses compared to income. This is where you figure out how much money you need to make in order to cover your expenses. Over the course of the next week, complete these sections of the business plan so you will be prepared to start the marketing section with next week’s article.
The current financials section of your business plan gives both you and outside parties a clear picture of what is going on with your business financially right now. As a business owner, you should always be aware of your financial picture. So the question for you this thrilling day is, what is the current financial condition of your business?
As always, if you need assistance or guidance as you complete this section feel free to contact me:
Janeane M. Davis, J. D.
James, Davis and Associates
484 381 0532
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