How to Create a Business Financial Plan


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Starting your own business can be the key to securing your financial future, and a way to finally take charge of not only your finances but your time and talents as well. When you own a business, you call the shots, and you decide where to best use your expertise.

But even though you call the shots, chances are you will need to secure outside financing, at least at the beginning. Getting a new business venture off the ground costs money, and in many cases that means you will need to secure grants, loans and other types of financing. In order to attract investors and get the financing you need in that critical startup phase, you need to have a detailed business financial plan in place. This financial plan will explain to investors and potential lenders why your business is destined for success.

Having detailed financial spreadsheets in place can be valuable even if you do not need to seek outside funding. Seeing the forecasts in black and white makes it much easier to plan everything from your quarterly tax payments to your capital investments. If you do not have such a plan in place, you are in essence operating in the dark, a risky thing for any business to do.

Creating business plan financial section

But even though you know you need a detailed financial forecast, it can be difficult to juggle the creation of that plan with all the other things you need to do in running your business. That is why a quality business financial forecasting software is such a good idea. Financial plans are complicated documents, and a single mistake could make the numbers contained in the plan useless, or even misleading. The last thing you want to do is show your pro-forma statements to an investor or a lender, only to have that individual find a mathematical mistake that could easily have been caught had you used the right software tool.

With a template-based business financial planning tool you simply input the information you know, information you have gathered from your business. These inputs allow the software to crunch the numbers and create the detailed financial spreadsheets you need to secure a loan, apply for a government grant program or attract the attention of investors with deep pockets.

Sample Business Financial Plan Template


Let us take a look at the typical inputs you will use to create your financials using a software application. The inputs you will enter into the program include:

  • Sales forecast – your best estimate of the sales your company will rack up during the time period specified
  • Cost of sales and gross margin – the cost of the products sold, and the gross margin you make on each product you sell
  • Purchase of fixed assets – the assets and equipment you need to buy to run your business
  • Funding – current funding in place, including venture capital, bank loans, owner financing, government grants and other sources

Once this information is entered into the software application, the real value of the technology becomes apparent. By taking these relatively simple inputs, the planning software creates a series of valuable outputs, including:

  • Income statement – a statement showing how much your company will earn ü Balance sheet – a statement showing the cash on hand, liabilities and all important bottom line
  • Cash flow statement – the amount of cash generated by the operation on a weekly, monthly, quarterly and annual basis
  • Financial ratios – the financial information needed to make business decisions

As you can easily see, these outputs have value in a number of different areas, over and above their value in securing the financing you need to start and grow your business. With these types of outputs in hand, everything from short term tax planning and preparation to long term strategic planning becomes much easier.

For instance, you can use your balance sheet and your income statement to figure the quarterly income tax bill for your company. Knowing how much your company is likely to earn by looking at the P/L statement generated by the software helps keep you out of hot water with the IRS, while at the same time avoiding overpaying your taxes with money that could have been better spent helping your new venture grow. This type of tax planning has a positive impact on the cash flow of your business, making it easier to do everything from hire new employees to purchase new equipment.

You have plenty of things to think about when starting and running a business, and there is simply no reason to make the process more labor intensive than it already is. With 12-16 hour days a staple of the entrepreneurial world, it pays to look for technical help whenever you can. Business financial planning software is one example of how modern technology can help you get the job done and save money in the long run.

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