One: Financial Planning

Your business will only be as strong as its financial plan. For your financial plan to attract investors and be valuable as a business planning tool, it must be based on reliable numbers and careful calculations.

Your financial plan should include:

• Start-up costs, if you are starting a new business
• Cash flow projections
• Projected (pro forma) balance sheets and income statements
• Balance sheets and income statements for at least the previous year (if your business is already in operation)
• A break-even analysis
• A ratio analysis (if your business is already in operation)

Remember that current financial statements are based on the actual numbers which describe your company's financial performance over the past year or years. Financial projections look into the future and estimate, as realistically as possible, the future performance of your company. When completing financial projections, it is advisable to use best, worst, and most likely scenarios.

If your business is already in operation, your accountant can easily prepare your financial statements, provided your bookkeeping records are accurate and up-to-date. For more information on bookkeeping and overall recordkeeping, refer to ED&T's Recordkeeping for Small Business.

Your accountant or a business consultant can help you prepare your financial projections. The business sections of libraries and bookstores also provide guidance materials for completing your financial statements and projections.

Start-up Costs
Income Statements
Break-even Analysis
Cash Flow Projections
Balance Sheets
Business Ratio Analysis