How to Write a Financial Plan for a Business
The business plan is considered the center-point of any business because this is where everything starts and it also guides the businessman to plan for a detailed and well-organized flow of his business. This is where the balance sheet, cash-flow projection and income statement are stated in a detailed manner. Before investing, most investors prefer to look at the financial plan because this will be the one to tell them if a certain company is worth it or not.
Writing a financial plan for your business is just easy not what others think.In fact, you don’t need to be a good mathematician in order for you to make a financial plan; you just need to know how numbers will have an effect to the way how your business will function.
An expert says that it only requires 5 pages long in order to have an effective and good financial plan. But there is no definite page length required. The one which has a great affect both on the success and failure of the business plan is no other the executive summary. This is the ultimate factor which will have a very influential effect on how your business plan will affect a certain reader.
Writing a Business Financial Plan
There are ways on how you can write an effective financial plan for your business and the bottom-line of everything is just preparation. The very first thing that you need to prepare is the income statement which is one of the most affective aspects of the three parts which the financial plan consists. This expresses the revenues and the expenses of the company. Through this, you and the potential investors will have the chance to predict on how the company will do in the next months or years.
The cash-flow projection is the next one that you need to prepare. This will serve as a tracker which will let you know the cash in and cash out in your financial transactions. Through this, you will also have the chance to prepare for a loss or a surplus. If you are just starting up in your business, you must have two columns for every month of your business operation. On the first column, the cash-flow projections will be included and on the second one will be the actual cash flow list.
You also need to prepare a well-detailed balance sheet which will balance the assets and liabilities. This one will determine on how the health of your business is going because of the fact that it is the one describing the net worth of the company. After getting the difference of the liabilities and the assets and there are excess funds, that means that the business is healthy in financial terms.
A financial needs summary is also needed in the financial plan to sum up everything. After that, you also need to have an exit strategy.
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