Fact you should know about the financial section of a business plan

Posted by samuelperth on June 16th, 2013

Every owner who opens a new business does this with the purpose of gaining as much profit as possible. This one of the main reason why most of those have not owned and organized a business before skip relevant parts in the plan developed for the whole process and fail to find out about important steps that should be taken before thinking about the financial benefits. In our opinion, one of the parts that should not ne skipped as it is utterly most important is the part which involves developing a solid financial section in the business plan. To put this in just a few words, this section will give if you information on how much you will have to invest, it will tell you whether or not you will be able to recuperate all of your money, but also relevant data, such as how appealing you would look in the eyes of investors. If the business plan is done properly, the financial section can provide a future business owner with a realistic overview of profitability and cash flow. 

Even though most experts say that you should develop the financial plan and projections with the help of an accountant, before you talk to any such professional, we advise to know what you are getting yourself into. This article will provide you with information about the high relevance of the financial sections, but also a few suggestions on how it can be done properly.

First of all, we should inform you that a financial planning should not be done prior to a market analysis or a thorough consideration towards the goals of you company. If you know exactly what you want to achieve, it will be a lot easier to get there.

Further more, such a section in your business plan should contain several important elements such as historical financial data, prospective financial information, as well as a brief analysis of your financial data. Each part has a key role in the proper development of you company, so if you wish to watch it grow try not overlook any of the statements mentioned above.

When it comes to properly writing a historical financial data for an already established company, keep in mind that this should include income statements, balance sheets, and cash flow statements for the past three years to five years.

The prospective financial information is also very important as it represent the future of the economical situation of your company. This part should include forecast income statements, again, balance sheets and clash flow statements for next five years. Do not forget to mention detailed product costing, as it will show the costs related to selling the product of service.

Last but not least, keep in mind that a proper business projection should correspond to the business scenario outlined in the other sections of the whole plan, meaning you should use the same currency, and keep the figures realistic.

If you wish to know how a proper financial section of a business plan should be written, you are in luck. Business Plan Hut has the best information regarding this mater. Find out how to properly calculate activity ratios, let us give you ideas for a new business, or simply let us make the one you already have prosper.