Generating the financial plan and accompanying pro forma financial statements for your business plan is a project in and of itslef. Undertaking this can be as time consuming as the writing of the entire remainder of the business plan's narrative. The following steps should guide you through this process.
Start With a Financial Model
Ideally, you should have a business plan template or financial worksheet which provides an Excel model to simplify the financial planning process. The Excel model should include short-term (2 or 3 year) and longer-term (5 year) financial statements (balance sheet, income statement and cash flow statement) all built out of formulas that tie them together. A worksheet should allow for you to test different levels of sales and costs to see the financial results in the statements. Creating a model like this from scratch can take a long time and require deep knowledge of the accounting principles behind financial statements which not all new entrepreneurs have.
Startup Costs
Next, pull together all of the research you have gathered on the costs you will incur before you launch the company to determine the capital investment needed. These costs will include early marketing, salaries (if any), equipment, furniture, leases, business licensing, and insurance. The model should have a place to add this information.
Revenue Projections
Think deeply about what will drive revenues in your first years of operation. Create assumptions based on these revenue drivers, scaling up revenues at a conservative, but appropriate, rate over the first five years of operation. If you will expand your staff or add additional locations, make sure to incorporate the effect that this should have on revenues.
Check Cash Flow
Finally, double check that the cash flow statement shows an ending cash balance that remains positive at all times. If it goes negative, the company is under-funded and needs to raise additional capital in the start-up phase. Either add to the capital invested or loaned or find a way to reduce your startup costs if you find cash balances dipping below a reasonable reserve level at any time.
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To speak with a Growthink business plan consultant, call 800-506-
5728 or complete the form below.
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Testimonials
Thank you very much for all of your hard work. We are very pleased with the final result of
the business plan and the PowerPoint - say congratulations on a job well done and that you can
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services in the future as we build our company.
Bryan Langslet
MediaCompound
Without Growthink’s professional help, we would never have been able to create an effective
business plan. Growthink not only did deep research on our business environment, but its
representatives also listened to us and refined their analysis to include what we had found
out through experience. We would recommend Growthink to any start-up business which does not
have a professional business plan developer on staff!
Howard Brown
Laptop Mini Mart
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