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.
Do you need an intermediate-term loan to purchase larger assets such as real estate or equipment? An income and spending plan determines how much can be set aside for debt repayment, savings and investing each month.
When you put together your financial statements, make sure there are absolutely no typos or mistakes in your calculations. They will also want to see that you have an exit strategy to cash out on your investment — and theirs. Financial plans should also be fluid, with occasional updates when financial changes occur.
References 1 Small Business Administration: 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.
When they are considering doing so, they will be comparing the risk and return of working with you to the risk and return they could get from lending to or investing in other companies. You must have supporting schedules e. If cash balances appear low for certain months, shift discretionary expenditures like advertising out of those months and into months where revenues are higher.
Also describe what collateral is available to secure the loan, such as inventory, accounts receivable, real estate, vehicles or equipment. 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.
Create arrangements for the preservation and distribution of assets with attention to minimizing settlement costs and taxes. Be aware that lenders do not count the full value of your collateral, and each lender may count a different percentage. Periodic reviews of your financial plan will not only assist you in keeping your small business on track, but it also will help you to identify the areas where you need restrictions and expansions.
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.
Formulas The break-even formula is one of the most important aspects of the small business financial plan. Supporting Documents The supporting documents of the financial plan are those that place merit into your financial figures. Institutions and financial specialists use an array of ratios to identify the information they seek about your business.
Your financial statements should show both a long- and short-term vision for your business. Do you plan to sell the business outright to another individual or company? The plan should include a strategy for accumulating the required retirement capital and its planned lifetime distribution.
Determine the assumptions you want to use for key variables such as unit sales, number of customers, and prices for your products or services. Include a customized asset allocation strategy based on specific investment objectives and a risk profile.
If you are inexperienced in preparing these statements, hire an accountant to help you.
Identify ways to minimize taxes on personal income to the extent permissible by the tax code. Ratios You can easily go wrong with your financial plan if you simply pull out your documents and fill in the numbers.
Be sure to estimate the costs of any improvements you want to make to the business. These are called "pro forma" statements, and they are based on your assumptions about how your business will perform. Convert marketing strategies into expenditures. A strategy might be to advertise in local newspapers or sponsor charity events to increase customer awareness.
A snapshot of assets and liabilities serves as a benchmark for measuring progress towards financial goals. What will your exit strategy be if the business is failing?
Three Key Financial Statements Your financial plan should include three key financial statements: The financial plan is normally prepared as part of an overall business planning process, during which goals are set and strategies are chosen to help the business grow in the upcoming year.
Will you have trade credit, and how long will you have to pay your suppliers? Forecast costs of goods sold.The business financial plan commonly appears in the overall business plan for a small business.
However, the financial plan is a self-supporting document intended to support and direct the actions of the business. It explains what your business can afford, how it can afford to do it and what the expected profits will be. Grizzly Bear Financial Managers financial planning business plan executive summary.
Grizzly Bear Financial Managers are financial and estate planning portfolio consultants and portfolio managers/5(53).
For the IRS’s view on financial and tax matters, go to the horse’s mouth. Check out Business Expenses (IRS Publication ), Tax Guide for Small Business (IRS Publication ), and Small Business Tax Workshop Workbook (IRS Publication ).
All three publications are available on the IRS website. The Income Statement is one of the three financial statements that you need to include in the Financial Plan section of the business plan.
The Income Statement shows your revenues, expenses, and profit for a particular period. A financial plan for a business can help managers determine if they can achieve the organization's goals. The financial plan is one of the first.
Before developing a financial plan for your small business, you may wish to consult with an accountant, lawyer, business mentor, business management consultant, educational institution, government agency, business or other association suitable to Financial Planning for Small Business.Download