The most important step in the process of creating your business plan is the creation of your financial documents. This section will also take the most time and effort. Here is the information you need to include in your financial plan:
- Startup/Purchase Expenditures
If you are starting your business, this financial statement should include all of the equipment, supplies, and other items you will need to purchase for startup, as well as fees and licenses, deposits, initial expenditures for advisers, and costs for creating your business structure. If you are purchasing a business, you will need to include all purchase costs, including those for advisers, mortgages, and agreements.
- Balance Sheet
You will need to prepare a startup balance sheet, showing assets, liabilities, and owner's equity as of the date of startup/purchase.
- Pro Forma Cash Flow
Include a detailed statement showing month-by-month sales and collections, along with all monthly business expenses. Create this statement for three years of operations.
- Pro Forma Income Projections
You will need to prepare a pro forma (projected) income statement (P&L) for the first three years of operations, showing income and expenses, along with pre-tax income, tax liability, and after-tax income for each of these years.
- Break-Even Analysis
If you are selling products, you should create a break-even analysis, showing the point at which you expect to break even on product sales.
- Sources and Uses of Cash
Many lenders request that you include a Sources and Uses of Cash statement, itemizing all of your financial needs for the business, along with your personal investment in the business, and the financing expected from your lender or investor.
