Financials for a business plan

Here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement. Based in the Washington, D. Getty Images A business plan is all conceptual until you start filling in the numbers and terms.

Financials for a business plan

As every experienced entrepreneur knows, sales are only the result of a long line of business activities beginning with market research, manufacturing, inventory building, marketing, fulfillment and customer service. All this costs money, which is supposed to come from revenues earned in the previous year or from financing.

Without the money, nothing happens, so the best place to start your financial projections is the money you have available.

Create a preliminary first-year budget based on your retained earnings and credit available from your bank. A conservative estimate is best because spending too much money too early can force you to cut back just as your business begins to pick up. Estimate the cost of producing your product.

You can skimp on administrative expenses and hire sales reps on commission only, but you must pay for any products or services you sell. You also need to balance your product inventory with customer demand. An established company is able to assign a reasonably accurate percentage with growth, but a startup must expect at least a quarter of virtually no sales.

A startup must develop its brand image and customer awareness during its first year, with sales demand appearing slowly during its second or third quarter; so, for a startup, marketing will carry a high priority.

A mature company can estimate marketing costs with respect to its plans for market-share expansion or development of new revenue streams. Adjust your production and marketing costs to fit your budget. The remainder is for administrative expenses.

This gives you a figure of how much revenue will be required to offset your expenses.

financials for a business plan

There may need to be some further adjustments once you reach this point. Add money to your marketing, figuring marketing costs at approximately 25 percent of total revenues.

Marketing will produce your customers. Keep your production expenses efficient. Tip Create a month detailed projection and expand it into three to five years by estimating a year-over-year growth percentage.

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If your growth strategy emphasizes a particular area, adjust your costs to reflect that. If you intend to expand your market share, marketing should receive more funds. Warning Optimism is a quality of the entrepreneur. This is often seen in overly optimistic financial projections.

Have an accountant, banker or experienced business owner review your projections with a critical and realistic eye. Those comments may save your company from disaster.This quick guide offers tips that will help you create the financials section for your business plan.

First Steps: Writing the Financials Section of Your Business Plan financials section. The complimentary resources and tools available on the Wells Fargo Works Business Plan Center will help you create or revise your business plan and give you a competitive edge to succeed.

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Writing a Business Plan: 9 Essential Sections - initiativeblog.com

Help at every step. With over sample business plans and expert advice and guidance everywhere you need it, Entrepreneur Magazine's Business Plan Pro takes the guesswork out of writing a business plan. Bplans offers free business plan samples and templates, business planning resources, How-to articles, financial calculators, industry reports and entrepreneurship webinars.

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financials for a business plan

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