Time For Completion: Approximately 35 hours
Financial statements are a very important part of your business plan.
They give you an idea of how your business would be performing according to the market assumptions and the business model you choose.
Ask somebody already in the business, or call service providers and ask them how much it will cost. This is great to start building your financial model.
Whats in it?
The Financial Projections section should include an Excel spreadsheet that can help you in preparing your projections. It usually includes key metrics such as the startup expenses, marketing goals, unit sales and costs, personnel, P & L, cash flows and finally it includes the balance sheets. The first years projections are prepared month by month, then annually for the following two to four years.
Why its Important
Your financial projections give you an idea of how your business should be doing at any moment in time. It also shows your potential investors how you will be profitable over time.
You have to be as realistic as possible in estimating your startup initial costs as they will determine how you will start your business as well as your expected profits. A business can easily fail if they honestly believe that they will sell more product and services than their market research suggests is possible. Therefore, financial statements in a business plan should always be conservative so they are believable.
Ask somebody already in the business, or call service providers and ask them how much it will cost. This is great to start building your team and determines how much cash you need to reach profitability.