This article will consider how you can go about writing the financial section of your business plan.
The financial section of a business plan normally starts with the introduction to the financial plan.
Simply, it adds all that the business owns (assets) and what it owes (liabilities) and the difference between these two forms the business’ net worth.
The net worth of the business is referred to as equity in some circles.
The inflow and outflow of cash in the company is captured, and the description of how the cash was spent is given.
This financial tool is used to determine the point of sales that a business should reach for it to get neither profit nor loss from trading.Simply, it is the point at which the difference between the total revenues and total expenses of the business is zero.Important elements that are considered in the break even analysis include: Also, the items present in the income statements are quite vital when doing the break-even analysis.When calculating the break even points, it is recommended to do them over a three year period for consistency.It also remains your own prerogative to decide whether you will provide readers of the business plan with explanations on the finer details of the analysis.The balance sheet normally states the net worth of the business as at a certain date.Most businesses draw it at the end of their fiscal year.An example of an introduction is as follows: “This financial plan gives the forecasted financial statements of Company ABC for a three year projected period.The income statement, cash flow statement and balance sheet have been drawn and the assumptions made have been outlined.It also shows the users of the statement the cash at hand at any given moment in time.The cash flow statement typically analyzes the changes that occur on the balance sheet.