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Writing the Business Plan: The Financial Plan The Balance Sheet The Balance Sheet is the last of the financial statements that you need to include in the Financial Plan section of the business plan. The Balance Sheet presents a picture of your business' net worth at a particular point in time. It summarizes all the financial data about your business, breaking that data into 3 categories; assets, liabilities, and equity. Some definitions first: Assets are tangible objects of financial value that are owned by the company. A liability is a debt owed to a creditor of the company. Equity is the net difference when the total liabilities are subtracted from the total assets. Retained earnings are earnings kept by the company for expansion, i.e. not paid out as dividends. Current earnings are earnings for the fiscal year up to the balance sheet date (income - cost of sales and expenses). All accounts in your General Ledger are categorized as an asset, a liab...

Writing the Business Plan: The Financial Plan The Cash Flow Projection The Cash Flow Projection shows how cash is expected to flow in and out of your business. For you, it's an important tool for cash flow management, letting you know when your expenditures are too high or when you might want to arrange short term investments to deal with a cash flow surplus. As part of your business plan, a Cash Flow Projection will give you a much better idea of how much capital investment your business idea needs. For a bank loans officer, the Cash Flow Projection offers evidence that your business is a good credit risk and that there will be enough cash on hand to make your business a good candidate for a line of credit or short term loan. Do not confuse a Cash Flow Projection with a Cash Flow Statement. The Cash Flow Statement shows how cash has flowed in and out of your business. In other words, it describes the cash flow that has occurred in the past. The Cash Flow Projection shows the c...

Writing the Business Plan: The Financial Plan The Financial Plan Section of the Business Plan It's at the end of your business plan, but the financial plan section is the section that determines whether or not your business idea is viable, and is a key component in determining whether or not your plan is going to be able to attract any investment in your business idea. Basically, the financial plan section consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements. This article will lead you through the preparation of each of these three financial statements. First, however, you need to gather together some of the financial data you'll need by examining your expenses. Think of your business expenses as broken into two categories; your start-up expenses and your operating expenses. All the costs of getting your business up and running go into the start-up expenses...

Tools to Help You Create a Better Small Business Plan Creating a business plan will take you undivided time and attention, but there are business planning tools available to help streamline the process, many of them available for free. There are templates available, including a simple business plan template and a traditional business plan template. There are also many business plan tutorials available, including video business planning tutorials. And let's not forget about all-in-one online tools like the SBA Business Plan Tool and services like RocketLawyer that take away a lot of the time required to format and organize your business plan. As you get started with your small business plan, explore these additional business planning tools to see how you can streamline the process even further. One mistake many small business owners make is creating a business plan because they are told they need one, and then completely forgetting about it. Once you have...

What You Need to Know About Small Business Plans If you are thinking about starting a small business, you most likely already know what a business plan is and have heard that you need one. But do you truly understand the purpose of a business plan? Does it really matter if you have one for your small business? And how can you create a small business plan that is actually useful? The introduction and tips below will lay the groundwork for creating an effective small business plan for your new business. Small Business Plans Explained In it's simplest form, a business plan is a document that outlines the basics about your business, products, and services; the market you are targeting; the goals you have for your business; and how you will achieve those goals. A business plan is one of several important plans you should have when you are starting a business, the others being a marketing plan and a financial plan. Your business plan should pull ...