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 Financial Section of your business should cover
- Budget: Your financial forecast that indicates where you plan to make and spend money. For a startup, it is a breakdown of your startup and operational expenses.
- Revenue Model: This will show sales breakdown and where the sales will come from in details such as what income on a monthly and quarterly basis will you earn from specific product or service.
- Income statement: it is typically a profit and Loss projection covering 3 to 5 years. It is essentially your bottom line ¯ subtracting costs from revenue to come up with net profit
- Cash flow statement: A cash monitor that follows the flow of cash in and out of your company. This will be typical be a cash flow forecasts covering 3 to 5 years.
- Balance sheet: A financial snapshot that shows what you own, what you owe, and what your company is worth
- Break Even Analysis
- Financial Ratios (Gross Profit Margin, Return On Investment (ROI) And Return On Owner’s Equity)
- Financial Assumptions: The Facts and Basis for your forecasts and Figures
Without well written financial projections in your business plan, the plan is a good as useless.