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

B. PRO FORMA CASH FLOW ANALYSIS

C. PROFIT AND LOSS FORECASTS

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 _______ _______

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