If you are starting a new business or planning to grow your business, then having a business plan is crucial! Ask yourself...
Is my business idea profitable? If so, how profitable?
How much cash will I need to start my business?
How much is my business going to cost me?
Will I need a business loan?
How much is my business going to be worth?
The only way to know the answers to these questions is through financial forecasts and projections, in other words, having a business plan!
What does a business plan include?
A business plan typically has 2 parts; the business financials and a written plan containing goals, aims and strategies.
The Business Financials
This should include a...
Cash flow forecast
Projected profit and loss statement
Projected balance sheet
The written side of the business plan usually contains analysis of the financials, business goals, business background, marketing plans, market research and information on business logistics.
How long should a business plan be?
A business plan typically covers 3 years of financial forecasts and projections.
The plan should be as thorough and detailed as possible. Especially if you plan on making the business a success and are looking for potential investors.
Business Plan - The Financials
As the name suggests, an expenses forecast projects expenses.
With a little bit of research you should be able to have a clear idea of how much each expense is going to cost the business.
The key to creating an accurate expenses forecast is to include every single expense - do not overlook anything. To help, review the list of expenses below...
Business Planning costs
Stationary & Printing costs
Uniform & Clothing costs
The video below will provide more information on expenses forecasting and show you how to create a expenses forecast...
As the name suggests, the sales forecast projects sales.
Forecasting sales accurately requires market research and marketing plans. To be honest, creating a detailed sales forecast is the hardest part of most business plans!
The key is to do your research and be conservative in the figures you are proposing.
The video below will provide more information on sales forecasting and show you how to create a sales forecast...
Asset purchases will also need forecasting. Assets add to the value of a business and can be costly, it is important that they are not excluded from the business planning process.
Common business asset purchases include office furniture, computer equipment, vehicles and property.
To create an accurate asset forecast, ensure that all possible asset purchases are researched and recorded.
*Recommended* How to Write a Business Plan Book: Business Planning Made Simple - *click here*
US link *click here*
Liabilities are what a business owes. They form part of the company's balance sheet and should be tracked for debt and management purposes.
Common business liabilities include bank and other loans, lease and finance agreements and trade creditors.
Sometimes a lability forecast cannot be fully completed until the cash flow forecast is completed - you don't know how much cash you will need to invest or borrow until you know how much cash will be needed.
The video below will provide more information on asset and liability forecasting and show you how to create asset and liability forecasts...
Cash Flow Forecast
In business, cash is KING! Without sufficient cash, your business will not survive, even if it's profitable!
A cash flow forecast projects all cash flowing into the business and all cash flowing out of the business. The purpose of the cash flow forecast is to project how much available cash - if any - will be available at any given time in future.
Cash flow forecasts are only as accurate as those documents needed to create the cash flow forecast, namely; the sales, expenses, asset and liability forecasts.
To learn more about cash flow forecasts and how to create a cash flow forecast, please watch the video below...
Projected Profit & Loss Statement
A profit and loss statement shows the businesses profit or loss for a period. It is simply sales minus expenses.
The projected profit and loss statement will show forecasted profits for the company, so you know what to expect.
The video below will show you how to create a projected profit and loss statement...
Projected Balance Sheet
Balance sheets show a list of a company's assets and liabilities and their values. If you have no accounting experience, it can be challenging to create a business plan, so you may want to ask an accountant to help you.
The video below will show you how to create a projected balance sheet...
Business Plan - The Written Side
As mentioned previously, the written side of a business plan includes analysis of the above forecasts and projections, business goals, background information about the company and other important items to highlight to yourself, lenders or potential investors.
Learn more about the written side of a business plan including a demonstration template by watching the video below...
Would you like a business plan?
The Bookkeeping Master (that's me) offers business planning services from £275 for a 3 year business plan. Learn more by visiting his accounting practice website here - www.smaccountinguk.com
All the best
The Bookkeeping Master