Financial Information

Content

This section identifies the financial needs of your business and shows the potential profits, therefore, is one of the most important. A business can grow and survive only if generates profits. During the preparation stage of the business plan, we must know how much money is needed and the expected profits. For this, the financial information that the business plan has, must include four documents:

• Monthly financial flows of the first fiscal year, which will show how much funds will ingress and how much will egress.
• Annual financial flows of the second and third fiscal year.
• Balance projected to three years.
• Income statement projected to three years.

Financial Flows

It’s an estimation of the quantity of money coming in and exiting on a determined time period.For this projection, we have developed the flow of five years. This information will help to calculate how much money is needed before having positive flows (more incomes than expenses) and when the investment will be recovered.

Furthermore, it will be useful to know when and how the capital will come in and how will out for the next months. Thus, we can estimate how much funds we will have on hand and know about potential financial bumps.

The financial flow projections, allow taking action in case the estimates not comply the real times of collection and payments. The logical steps to obtain all necessary data and to elaborate the set of spreadsheets are:

• Sales estimates of products and services: It’s about estimating monthly sales during the first year, and annually for the next years. This is applied to the main products or services provided by the company. It must include current and projected prices. If you are offering many services, indicate those that cover 75% of your total sales.
• Estimates of collections on your sales. What have been the arrears and bad debts from last semester?
• Sales production cost.Does your company have identified or developed any cost system and/or budget system? How have you estimated the costs of sales?
• Estimated cost of administration, marketing and taxes.
• Other financing sources, debt services and resource usage. What are your current financial sources? What dividend policy is compromised and/or will carry out?

All fund ingress or egress which is not coming from the business operation, for example, distribution of profits, loans, loans repayments and interest, or other, must be listed and described separately.

Balance

It’s required as a starting point. If the company exists, a template must be made with all data of the initial balance of the period, corresponding to the current business plan. Furthermore, the numbers contained in the balance sheet, we must know the following:

• Current financial situation to date to the business planning release.
• Exchange goods existences.
• Payments and collections deadlines.
• Major creditors on repayment terms and fees.
• Factors that have affected its profitability.

The main projected balance is necessary in order to know how will be the economical situation at the end of each year, specially, the relation between assets and liabilities in your business. We made this projection corresponding to a year.

Income Statement projected for three years

This template gathers all information that has been prepared previously to which each interest must be added for each credit operation. This includes depreciation and taxes corresponding to each projected year.

This is just an example: