For those who need a formally-written document, we also include a business plan template at the bottom of this article. Who Needs a Business Plan? A business plan takes all the key considerations of your business, from your 1-sentence pitch to your revenue model, and puts it in a single neat document.
Here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement. Based in the Washington, D. Getty Images A business plan is all conceptual until you start filling in the numbers and terms.
The sections about your marketing plan and strategy are interesting to read, but they don't mean a thing if you can't justify your business with good figures on the bottom line. You do this in a distinct section of your business plan for financial forecasts and statements.
The financial section of a business plan is one of the most essential components of the plan, as you will need it if you have any hope of winning over investors or obtaining a bank loan. Even if you don't need financing, you should compile a financial forecast in order to simply be successful in steering your business.
The Purpose of the Financial Section Let's start by explaining what the financial section of a business plan is not. Realize that the financial section is not the same as accounting.
Many people get confused about this because the financial projections that you include--profit and loss, balance sheet, and cash flow--look similar to accounting statements your business generates.
But accounting looks back in time, starting today and taking a historical view. Business planning or forecasting is a forward-looking view, starting today and going into the future.
It's an elaborate educated guess. And you don't spend a lot of time on minute details in a financial forecast that depends on an educated guess for sales. You're going to need it if you are seeking investment from venture capitalists, angel investors, or even smart family members.
They are going to want to see numbers that say your business will grow--and quickly--and that there is an exit strategy for them on the horizon, during which they can make a profit. Any bank or lender will also ask to see these numbers as well to make sure you can repay your loan.
It should be a guide to running your business," Pinson says. One way, Berry says, is to break the figures into components, by sales channel or target market segment, and provide realistic estimates for sales and revenue. But if you break the guess into component guesses and look at each one individually, it somehow feels better," Berry says.
The Components of a Financial Section A financial forecast isn't necessarily compiled in sequence. And you most likely won't present it in the final document in the same sequence you compile the figures and documents.
Berry says that it's typical to start in one place and jump back and forth. For example, what you see in the cash-flow plan might mean going back to change estimates for sales and expenses. Still, he says that it's easier to explain in sequence, as long as you understand that you don't start at step one and go to step six without looking back--a lot--in between.
Start with a sales forecast. Set up a spreadsheet projecting your sales over the course of three years. Set up different sections for different lines of sales and columns for every month for the first year and either on a monthly or quarterly basis for the second and third years.
Because you want to calculate gross margin. Gross margin is sales less cost of sales, and it's a useful number for comparing with different standard industry ratios. The best way to do that, Berry says, is to look at past results. Create an expenses budget. You're going to need to understand how much it's going to cost you to actually make the sales you have forecast.Starting a business was the last thing on Sean Hackney's mind when he sat down to write a business monstermanfilm.com to persuade a soft drink company to hire him, Hackney scripted a plan for taking on.
Business plan template and example: how to write a business plan: Business planning made simple - Kindle edition by Alex Genadinik. Download it once and read it on your Kindle device, PC, phones or tablets.
Use features like bookmarks, note taking and highlighting while reading Business plan template and example: how to write a business plan: Business planning made simple. If you want to write a business plan for a shipping company, you probably already have a shipping company or have the expertise to start one.
A professional business plan will help you look good to the bank managers, loan officers and investors. It's absolutely essential for securing the large amount of monies. Tim Berry, president of Palo Alto Software Inc., responds to a reader seeking advice on finding a low-cost writer to help with a business plan.
Related: More business plan articles Company. A Business Plan can be used to build the framework for your new or existing enterprise, and to set goals for your business. It can also be used by your startup as a way to present your ideas, sales projections, and plans for achieving your objectives to potential investors for funding purposes.
Few areas of business attract as much attention as new ventures, and few aspects of new-venture creation attract as much attention as the business plan.