How to Write a Great Business Plan

VI. The Financial Plan

The financial plan is basic to the evaluation of a business opportunity and should represent your best estimate of future operations. It can also serve as an operating plan for your management team.

In developing a financial plan, several basic forecasts must be prepared. Many decisions will be based on what you present here. At the appropriate time, your advisors may recommend some changes, but it is vitally important that you apply your best efforts in formulating these forecasts.

A. SOURCES AND USES OF FUNDS

Please refer to Exhibit VI-A.

B. PRO FORMA CASH FLOW ANALYSIS

Please refer to Exhibit VI-B.

C. PROFIT AND LOSS FORECASTS

Please refer to Exhibit VI-C.

D. PRO FORMA BALANCE SHEETS

Please refer to Exhibit VI-D.For an existing business, balance sheets and income statements for the current and previous three years should be provided. After you have completed preparation of the financial exhibits, briefly highlight the important conclusions that can be drawn. Finally, explain all of your assumptions and the sources of your data.

Sources and Uses of Funds

EXHIBIT VI-A

Funds available:
Owners’ funds	___________
Other equity	___________
Loan No. 1	___________
Loan No. 2	___________
Total		___________
Uses of funds:
Land	___________
Building	___________
Equipment	___________
Machinery	___________
Renovations	___________
Prepaid insurance	___________
Promotions	___________
Inventory	___________
Furniture and fixtures	___________
Deposits	___________
Other	___________
Total		___________
CASH BALANCE:
(or working capital)		___________

Pro Forma Cash Flow Analysis

Please find the Pro Forma Cash Flow Analysis here (opens in a new window).

Profit and Loss Forecast

EXHIBIT VI-C

	Year 1		Year 2
	Amount	% of Net	Amount	% of Net
Sales:
Sales No. 1	_________	____	_________	____
Sales No. 2	_________	____	_________	____
Gross Sales	_________	____	_________	____
Less returns	_________	____	_________	____
Net Sales:	_________	100%	_________	100%
Cost of goods sold:
Beginning inventory	_________	____	_________	____
Purchases	_________	____	_________	____
Additional inventory	_________	____	_________	____
Goods available	_________	____	_________	____
Less ending inventory	_________	____	_________	____
Total material cost	_________	____	_________	____
G&A Expenses:
Labor	_________	____	_________	____
Management	_________	____	_________	____
Payroll tax	_________	____	_________	____
Benefits	_________	____	_________	____
Advertising	_________	____	_________	____
Truck/Auto expense	_________	____	_________	____
Contributions	_________	____	_________	____
Charge cards	_________	____	_________	____
Dues & subscriptions	_________	____	_________	____
Freight	_________	____	_________	____
Insurance	_________	____	_________	____
Legal & accounting	_________	____	_________	____
Office supplies	_________	____	_________	____
Shop supplies	_________	____	_________	____
Travel	_________	____	_________	____
Telephone expense	_________	____	_________	____
Utilities	_________	____	_________	____
Repairs	_________	____	_________	____
Taxes/licenses	_________	____	_________	____
Rent/lease	_________	____	_________	____
Other expenses	_________	____	_________	____
Interest payments	_________	____	_________	____
Depreciation	_________	____	_________	____
Total G&A Expense	_________	____	_________	____
Net income (pretax)	_________	____	_________	____
Income tax:
Federal	_________	____	_________	____
State	_________	____	_________	____
Total taxes	_________	____	_________	____
NET INCOME	_________	____	_________	____

Pro Forma Balance Sheet

EXHIBIT VI-D

	Year 1		Year 2
ASSETS
Current Assets:
Cash	_______		_______
Ending inventory	_______		_______
Accounts receivable	_______		_______
Other	_______		_______
Total current assets		_______		_______
Fixed Assets:
Land	_______		_______
Building	_______		_______
Equipment	_______		_______
Machinery	_______		_______
Renovations	_______		_______
Furniture & fixtures	_______		_______
Other	_______		_______
Total fixed assets		_______		_______
Less accum. depreciation		_______		_______
Net fixed assets		_______		_______
Other Assets:
Deposits	_______		_______
Other	_______		_______
Total other assets		_______		_______
Total Assets		_______		_______
LIABILITIES
Current Liabilities:
Notes payable	_______		_______
Current portion
long-term debt	_______		_______
Other	_______		_______
Total current liabilities		_______		_______
Long-term Liabilities:
Loans payable	_______		_______
Less current portion	_______		_______
Total long-term debt		_______		_______
Total Liabilities		_______		_______
EQUITY
Owners’ funds	_______		_______
Retained earnings	_______		_______
Total Equity		_______		_______
Total Liabilities and Equity		_______		_______