What are the financial aspects of a business plan? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
When you get to the financial aspects of your business plan you pretty much can add as much information as you want. However, depending on who you trying to impress or what you’re trying to accomplish; you might want to just keep it simple.
Here are the vitals for your financial plan.
#1. 12 Months’ Cash Flow Forecast
Sometimes investors may require a 24 months cash flow forecast but that’s very rare. Your cash flow forecast is what dictates the flow of cash in and out of your business. It will cover how much money you make from sales, your expenses, and your monthly balances. This is the most important document in your financial plan.
One word of advice: Make sure you include all the expenses you have mentioned in other parts of your business plan.
Savvy investors and business advisors realize that most people do not carry through the expenses mentioned and they use this as a test to determine whether the business owner is conversant with their plan or not!
#2. Profit and Loss Account for The Year
This gives an overview of the exact amount of money generated over the year and includes certain items that are not found in the cash flow forecast like depreciation, credit sales.
#3. Balance Sheet
If you are an existing business you need to submit a balance sheet. This document depicts your liabilities and assets as well as retained profit and some revenue sharing information.
You want to dazzle investor? Include financial ratios. Someone online has done a very good job of putting together different types of ratios so check out their work here