As a new business owner, one of the first steps you will take in launching your new business is creating a business plan. This not only will it set your business up for future success, but if you are looking for funding, having a solid business plan helps investors and lenders see your vision as clearly as you do.
Jennifer Spaziano, vice president of business development at Accion emphasizes the importance of the financial portion of your plan. “This section … is crucial if you’re presenting your plan to potential lenders or investors, but it’s also important if you’re using it in-house as a roadmap to get started and continue to grow.”
She added that while you may have the best idea in the world for a business, it may need tweaking, but you won’t know until you sit down and work up the numbers.
Tips for writing the financial section
If you’ve never written a financial section of a business plan, or a business plan at all for that matter, these tips are helpful. In addition to the tips below, you can find business plan templates on a number of websites where you can fill in your business information and download your complete plan. Here are four tips Spaziano suggested:
- Follow generally accepted accounting principles (GAAP). As a rule, the financial part of your plan should follow these as set by the Federal Accounting Standards Advisory Board, especially if you’re putting it together primarily to get a loan or a line of credit.
- Get fluent in spreadsheets. Spreadsheets are the best and most accepted way to present financial information.
- Seek outside assistance. Getting advice from your financial planner or accountant can help you put the numbers together and present them properly. If you use an accountant and your financial statements have been audited, note that in the plan.
- Look up templates. If you want to attempt writing the financial section on your own, there are resources out there. SCORE, the Service Corps of Retired Executives, as well as many other sites, have templates available.
The necessary information
Each section of a business plan has its own set of required pertinent information, and the financial section is no different.
“There are two parts to the financial component of a business plan: historical data and prospective data,” according to Spaziano.” If you’re a startup, you obviously won’t have any previous financial information for the company, so many lenders will want to see your personal financial information in lieu of, or in addition to, your business financials.”
Historical data includes items like your balance sheet, cash flow statements, tax returns, and capital, while prospective data includes details like a projected income statement that will help lenders and investors understand how you want to invest their money.
Read more: https://www.businessnewsdaily.com/10644-write-financial-section-business-plan.html