What does this mean ? Does my business need to do a current plan and a future plan ? How do I project income and expenses ?
In a business plan document the financial plan is the most structed, the most uniformed and the most important when aiming to secure investment. The financial section is composed of three financial statements: the income statement, the cash flow projection, and the balance sheet. It also should include a brief explanation and analysis of these three statements. There are business types where profit is not the main objective, there are business ventures where it’s not expected to break even – what is never encouraged is unnecessary spending and a sinking hole in the bank accounts. The foundation for finances is knowledge –
- How much is the business spending ?
- Can I account for every cent of expenditure ?
- Have I done the due diligence on my suppliers costing ?
Start at the beginning – get a spreadsheet going that will be easy for recording the business monthly profits and losses. Going online can get overwhelming so I have collected a batch of financial worksheets that have proven to be clear and detailed, contact me to chat about these. The worksheet that is relevant here is the operating expenses. In a business plan the operating expenses will be included in the income statement.
This work sheet will have line items for ka-ching income and expenses – some expenses are monthly operating expenses that will be repeated; for example rent and salary and some expenses may be a once off, for example purchasing a new phone.
I have also done some research and discovered small companies that use simple spread sheets, I even spoke to a successful entrepreneur who “ I use a manual spreadsheet in a book. Started when I was a kid. My mother insisted I learn and do. “ The benefit of writing down expenses manually can have a profound impact, more on that next week when we look at the ‘Kakeibo’; the Japanese art of saving money !
On a very practical note: “Budgeting your money is the key to having enough.”