Starting A Business? Take The Time To Prepare A Financial Plan.
An important part of any business startup plan is preparing a financial statement, where you make profit and loss projections that can be used to look at sales and expenses over a period of time.
These projections can serve as an initial roadmap for you and for potential lenders or investors. Take the time and do your research because this plan can help you stay focused and realistic.
Experts suggest that a profit and loss statement should show monthly projections for at least a year and then at least quarterly outlooks for the next two to three years.
Be sure to include all expected expenses, such as employees, utilities, rent or lease costs, supplies, marketing, and the cost of purchasing goods, vehicles or other expenses.
You’ll also need to project your income from the sales of your goods or services. Consider the types of things you’ll be selling and also take time to estimate if sales are likely to rise or fall by time of the year.
You should also include funding sources and use statements if you plan to borrow money for your business. This will indicate to potential lenders how much you might expect to borrow and how much of your own funds you plan to contribute to your business. Take the time to break down how you plan to use the money. When consulting with a lender, this can also help identify the financing options that can best meet your needs.
Professionals suggest that you do your financial plan research and that you be as thorough and realistic as possible. You want to show how you expect money will come in and go out of your business over a period of time.
There are numerous resources – including templates – on the Internet that you can use to help prepare a financial statement, and there are various places where you can turn for face-to-face advice.
If you are looking at financing options, talk with a professional at your financial institution about your choices and about what level of detail they are looking for in a financial plan.
The more information you include in your plan the better prepared you’ll be for success.