Financial plans can help consumers and companies take greater control of their financial futures. According to the financial wellness resource SmartAsset™, a financial plan is a comprehensive overview of financial goals and the steps needed to reach those goals. The plan prioritizes the goals, then outlines exactly what is needed to achieve them.
While financial plans are often discussed in terms of individuals’ retirements, financial planning also is vital for prospective business owners. Financial plans for businesses can help business owners set goals that they can use to help their businesses thrive. By including certain components in those plans, business owners can get an accurate idea of what it will take to make their businesses successful.
Cash flow statement
A cash flow statement will illustrate the income sources and expenses of a business entity. Without knowing how much cash you have on hand and how it is being allocated, you will have a difficult time managing a budget. Business owners will need a cash flow statement when seeking funds from lenders and investors.
A balance sheet is a financial statement that includes assets, liabilities, equity capital, total debt, and more. A balance sheet establishes a company’s financial position at a particular moment in time, and better illustrates what the company owns and what it owes.
Profit and loss statement
According to the business plan advisor BPlans, a profit and loss statement, often referred to as a P&L, is an explanation of how a business made a profit or incurred losses over a certain period of time. It lists all revenue streams and indicates the total amount of net profit or loss.
A sales forecast is a projection of what a business owner thinks will sell in a given period. This is an incredibly important part of the financial plan, especially when reaching out to investors. It also should be an ongoing part of the planning process so your company can keep moving forward.