There are several aspects to creating a business plan for a startup company such as writing your mission statement, learning how to market your company’s products and services, but writing a financial plan is one of the most critical factors in developing your small business. Without a section narrowing down your financial goals, you won’t win over investors or be able to achieve receiving a loan from the bank. Even if you feel as if your small business is secure financially, a financial plan can guide you on how to run your business. Still, what exactly are the components of a financial plan that you need to be aware of? Keep reading for a guide on significant elements of your business plan.
What Is a Financial Plan?
Before knowing what the elements of a financial plan are, it is vital to outline what the concept is itself. Accounting belongs in a different category. Accounting often looks back in time while a financial plan looks at the present and future climate of your small business. With a financial plan, you won’t spend time on minute details. It’s more of an educated guess on the profitability of your small business. You’re going to utilize this type of plan, a) if you need investors because they want numerical data that your business will thrive and b) for your benefit, as you’ll have a document to refer back to, reminding you of how well your business will do. Just remember to be realistic.
Components of A Financial Plan
- A Sales Forecast- A sales forecast involves the business owner estimating future sales. The main goal of a sales forecast is to be able to predict long and short term outcomes. To forecast your small business, you will need to refer to how sales have gone in the past, compare your small business to other industries, and look at economic trends.
- Expense Budget– You need to be aware of how much it’s going to cost you to gain the sales that you’ve predicted. There are fixed costs, for example, rent and payroll. Then, there are variable costs, for example, shelling out more money on marketing.
- Cash-Flow Statement-A cash flow statement is a necessary part of any business’ financial report. Based on how cash flows in and out of your business, it’s a guarantee that you’ll be able to pay for debts and be able to afford business operation overall.
PL Consulting Can Help You Plan Your Budget!
PL Consulting offers a diverse range of bookkeeping and other financial services. Each of our services is customized to fit the needs of our client and his or her business plan. Our team can help you with each step of your business from organization, to budget, to financial maintenance. We are located in Pikesville at 119 Old Court Rd Baltimore, MD 21208. Contact us at 410.764.3731 or email@example.com so that we can assist you with your bookkeeping needs. Remember to stay up to date with everything PL Consulting by following us on our social media platforms via Facebook, Twitter, and LinkedIn.Posted on