When you are a small business owner heading off to ask the bank for a small business loan, one of the first documents the loan officer typically step by step guide to doing a dissertation for is the business plan.
This information helps you determine how much financing your business needs and helps outsiders determine whether lending you money or investing in your business is a wise use of their funds.
Financiers want and often require entrepreneurs to put their own funds in the venture, and the greater the portion you commit relative to your net worththe better. You must also determine which type of financing would be most suitable for your business.
Banks offer several types of loans to businesses that do not present too much risk. Do you need a short-term working capital loan to increase your inventory? Do you want a transaction loan, with which you receive all the money at once, or a line of credit that lets you draw on funds as you need them?
Do you need an intermediate-term loan to purchase larger assets such as real estate or equipment? Or are you a high-risk business that needs to jump through the extra hoops required to secure a government-backed Small Business Administration loan?
Structuring Your Financial Plan Begin your financial plan with information on where your firm stands financially at the end of the most recent quarter what its financial situation has looked like historically. Then lay out your goals with financial projections for the next three to five years, depending on what lenders or investors have asked for.
These are called "pro forma" statements, and they are based on your assumptions about how your business will perform. Your one-year projections should be broken down by month, while your more distant projections can be broken down by year.
If your business is new, your statements will be speculative, but you can make them realistic by basing them on the published financial statements of existing businesses similar to yours. Three Key Financial Statements Your financial plan should include three key financial statements: Lenders and investors want to know what kind of numbers your company is working with and whether your company is profitable or expects to be soon.
Within each category are numerous subcategories. For example, your assets will include cash, accounts receivable, inventory and equipment. Your liabilities will include accounts payable, wages and salaries, taxes, rent and utilities, and loan balances.
How much will these expenses be, and how often will you need to pay them? Will you have trade credit, and how long will you have to pay your suppliers?
Your financial statements should show both a long- and short-term vision for your business. In business plans, three-year and five-year projections are considered long term, and your plan will be expected to cover at least three years.
Your projections should be neither overly optimistic best-case scenarios, nor overly cautious worst-case scenarios, but realistic in-between projections that you can support. Lenders may want your statements presented in a certain way, so ask before you draw them up.
A bank, for example, may want to see monthly projections for the first year, quarterly projections for the second year and annual projections for the third year. In addition to financial statements for your company, if you are a new business, you may need to provide personal financial statements for each owner.
Whatever their form, financial statements must be complete, accurate and thorough.
Each number on your spreadsheets must mean something. Your income statement must reconcile to your cash flow statement, which reconciles to your balance sheet. Your balance sheet must balance at the end of every period. You must have supporting schedules e.
To learn more about what investors will be looking for, see Reading The Balance Sheet Use realistic projections. Investors vary in their standards, but most like to see positive cash flow within the first year of operation, particularly if this if your first venture.
In order for your projections to be accurate, you must know your business. When you put together your financial statements, make sure there are absolutely no typos or mistakes in your calculations. If you are inexperienced in preparing these statements, hire an accountant to help you.
Even if you and all of your business partners know exactly what you are doing, you may still want to hire an unbiased, outside professional to check your work and give you a second opinion on whether your projections are realistic. Additional Financial Information In addition to financial statements, prospective lenders or investors will also want to see a Sales Forecast and, if your business will have employees, a Personnel Plan.
Sales Forecast The Sales Forecast is a chart that breaks down how much your business expects to sell in various categories by month for the next year and by year for the following two to four years. For a cleaning service business, the sales forecast might list one-time cleanings, monthly cleaning contracts and annual cleaning contracts and further break those down by houses, condos, apartment units, entire apartment buildings and office buildings.
For a grocery store, the sales forecast might list projected sales of fruits, vegetables, dairy, meat, seafood, packaged goods and hot prepared meals. If your business sells a product, your sales forecast should include the cost of goods sold.
Personnel Plan If your business will have employees and not just managers, you will need a Personnel Plan showing what types of employees you will have for example, cashiers, butchers, drivers, stockers and cooksalong with what they will cost in terms of salary and wages, health insuranceretirement-plan contributionsworkers compensation insuranceunemployment insuranceand Social Security and Medicare taxes.
So how, exactly, do you plan to use any money that lenders or investors offer you?Financial Services Business Plan Green Investments is a financial service company whose mission statement is to make successful investments in environmentally responsible companies.
This financial services business plan gives details of how Green Investments aims to become the leading environmental investment firm. How to write the financial plan section of the business plan: the income statement, cash flow projections, and the balance sheet (templates included). Services Service 1 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. A plan business lending illustrates to the loan officer that you have organized your thoughts and company through the process of thinking the business out.
You money write for business plan simply and quickly if you gather your information and assemble it in a logical manner.
Retail Financial Services 8 Business and Agriculture 9 Corporate Financial Services 10 ATB Investor Services 11 Our Strategic Service Units 12 2 BUSINESS AND AGRICULTURE B&AG BUSINESS PLAN Leveraging Channels and Payments Technology and Shared Connections: As we continue to leverage our banking system, .
Financial Services Business Plan Green Investments is a financial service company whose mission statement is to make successful investments in environmentally responsible companies.
This financial services business plan gives details of how Green Investments aims to become the leading environmental investment firm. Part 5 Create and Implement your Financial Action PlanLook at the big picture. Now that you've developed goals, identified alternatives, and evaluated those alternatives, create a list of the strategies you've urbanagricultureinitiative.com your current net worth into urbanagricultureinitiative.comecide which goals you'll pursue now.
Develop a budget that incorporates your financial planning goals. Consider hiring a professional financial adviser.