One of the most important documents you should have is a business financial plan. A carefully crafted, well-thought out plan can help you determine your current, and future cash needs. In addition, most businesses will be unable to borrow money, factor contracts, or establish lines of credit unless they can provide a financial plan to their lender. What Information to Include in a Financial PlanYour financial plan is not only necessary, and helpful for potential lenders or investors, but it can also be an invaluable tool for you to determine what steps to take in your business. The ideal financial plan will have multiple sections including:
Always keep your projections realistic; a lender will ask you the basis of your projections and you should always be prepared to explain why you have chosen the numbers you did. Remember, things like fixed costs of rent, insurance, and real estate taxes may increase over time; take this into consideration when preparing your projections. This section should be based on your current income, expenses, etc. Do not include any projections that would include funds borrowed.
Financial Plans: Not Just Valuable For LendersWhen creating a financial plan, it is important to keep in mind, it is not only useful for lenders. Business owners can, and should review their financial plans from time to time to determine if they are on track with projections, or if they need to readjust their projections. Looking at where your business finances were in the past, and what you anticipate doing in the future can help you achieve realistic goals, and help you set new goals for your business. Business owners who set realistic goals, and have ideas for meeting those goals, are more likely to find long-term success. Financial plans for your business need not be complex; however, they should provide actual data. The post How to Write a Simple Business Financial Plan appeared first on Capstone. via Blogger How to Write a Simple Business Financial Plan
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