Written by: Freddie Tubbs
As a business owner, one of the things that you'll have to do is take out a loan which will give you enough assets to be successful in the future.
However, before you take outlet a loan, you need a business plan. A business plan is an aborted educated guess which tries to convince your investors that your business will be successful.You can use the business plan for more than just getting the loan - later you can use it internally or for investors.One of the most important elements of any business plan is the financial section. However, it's the one most people struggle with, not understanding how forecasting works. Some predict unrealistic improvement rates for the next few months and some make a lot of mistakes.But if you are still confused on how to write it, here are some tips:Create a sales forecast
The first thing you need to do is create a spreadsheet which will showcase your sales in the next few years - three is a good number. “You'll need to create different sections for different sales and columns for each month for the first year. You can describe the second and the third year on a monthly or quarterly basis”, - explains Jillian Triggs, a Sales Manager at Bigassignments.The spreadsheet should have a section for each of these:Describe expenses budget
To truly understand how much it’s going to cost you to produce avl certain amount of units, you should look at your fixed and variable costs.Fixed costs are things like the rent, the payroll and so on while the variable costs are mostly marketing related or promotional.Lower fixed costs mean that you are taking a lower risk.But in your financial section, you will also have to estimate the taxes and interest in order to create a good financial section of the business plan.Edit, proofread and format
Writing a business plan is similar to writing copy. You are supposed to persuade your investors to invest in your business. There are some great techniques that make the writing more appealing and compelling to the reader.For this, you’ll need some solid copywriting guides and tools that can help you write amazing and accurate copy for your business plan.Talk about cash flow
This is a statement which shows cash moving in and out of your company. It’s one of the most important things in the business plan, based to forecasts and assumptions in case you are a new company. However, if you are an already existent company, you can look at older data and historic documents and base your predictions upon that. You need to choose a realistic ratio of how many invoices will be paid in cash and over what period of time.Follow GAAP
GAAP stands for Generally Accepted Accounting Principles. Your financial plan should follow these rules. Especially if you are creating a business plan specifically in order to get a loan or a line of credit.Look for help
If you are really insecure about your business plan financial section, you can always seek some outside assistance. An accountant, for instance can put everything together more efficiently and accurately. If an accountant is working on your financial statements, you should state that in your plan.Do the breakeven analysis
The breakeven point is where your sales match your expenses. “This is an important analysis for all of your investors. At a certain point in time, if your business has been viable, your revenue will be much bigger than your expenses”, - explains Caren Baehr, a Financial Adviser at Oxessaysand Assignment service.Bottom Line
Financial section of your business plan is probably the hardest one to write because you have to do a lot of assuming. Follow these tips to write a good financial section.Freddie Tubbs is a communication manager at Academized . He regularly contributes articles to online magazines and blogs, and is writing Oxessays and Australian help blogs.