Financial Analysis

A business plan is not aloof words; it is words and numbers. You charge to

understand and explain how abundant it will amount to get your business up and

running, and how abundant it will amount to accumulate it activity on a account basis. The

financial needs of the plan depend abundantly on your business and sales strategies.

They all charge fit together. Remember, though, that while projections are

projections, they charge appearance an compassionate of how all of the variables of

the business plan fit together. In the end, you charge absolutely accept the

numbers because investors will barbecue you on them.

In this section, you are additionally activity to explain how abundant money you are

asking for and how you will be spending it. This area will accommodate a spreadsheet

that analyzes assets and costs for the abutting few years, including:

• Accumulation and accident account (P&L). This is a arbitrary of your projected

business affairs over a aeon of time. It explains the difference

between your assets and expenses. An assets account is the

same as the accumulation and accident statement. Your P&L will accommodate analyses

of sales by month, gross accumulation and accumulation margin, overhead, depreciation,

interest payable on any loans, and net profit.

• Banknote breeze statement. This account shows how abundant banknote your

business will need, back it will be needed, and area it will come

from. Do you charge to buy inventory? How abundant will that amount every

month? What are your receipts, bills, accomplishment paid, etc.? That is what

you will be discussing here. The banknote breeze account is important because

it armament you to realistically attending at the basal band and see if

you are authoritative (or are activity to make) abundant money to account your

debts. A banknote breeze account is a abundant apparatus that you should use

throughout your business career as it is a mirror of area things are.

• Antithesis sheet. The antithesis area forecasts your assets and liabilities.

It shows your banking position at a anchored point in time, usually at the

end of the year. It helps you accept area all the money coming

into the business has appear from and area it has gone. Antithesis sheet

information is extracted mostly from the P&L and banknote breeze statement.

This area is generally the best difficult allotment of a business plan for many

entrepreneurs. It’s accessible to wax anapestic about your absurd business abstraction and

how it will accomplish anybody rich. Actually putting adamantine numbers to those projections

is not consistently easy, but you accept to do it. You accept to crisis some realistic

numbers to go forth with your astute (and hopefully enthusiastic) plan.

Where do you get this information? There are abounding sources of information

to abetment you. Some key sources are competitors, barter suppliers, business

associations, barter associations, barter publications, and barter directories.

Once you accept this information, you will charge to accommodate it in your financial

statement.