A company depends not only on business plan. Good business development planning is critical to success. However, it is not the only factor to take into account. The financial statements present in a financial plan are equally or more decisive for the success of a startup.
A good financial plan it is the first step towards the survival of a company. Here, the entrepreneur manages to have a complete view of his entire business, forecasting profits and expenses and thus making the most correct and efficient decisions.
This document is not limited to large companies. On the contrary, small businesses and individual entrepreneurs use this plan for sound financial management. In addition, it helps to determine short and long-term financial goals and create a balanced plan for achieving them.
Now, one financial plan it is a document containing financial statements, from which it is possible to obtain essential numerical information for entrepreneurs, investors or other types of stakeholders. This information combines qualitative and quantitative data for the economic calculation, in order to prove the viability and profitability of the business.
Structure of a financial plan
The base is financial plan they are the income statement, cash flow statement and the balance sheet.
The first informs about the profit or loss that a company obtained, in the development of its activities in a certain period of time. It is a dynamic accounting statement, comparing revenues, costs and expenses.
The cash flow statement is one of the most used calculations in the analysis and valuation of a company. This allows to obtain a future view of its financial resources, consisting in the forecast of inflows and outflows of monetary resources, in a given period. In addition, it is possible to demonstrate the real situation of the company's cash, which can contribute to decision-making regarding purchase, sale, investments, product costs and payments.
Finally, the balance sheet is the set of reports of a company's financial statements, in order to present the company's accounting, financial and economic position on a given date. The balance sheet is represented by assets (assets and rights), liabilities (obligations) and equity (difference between total assets and liabilities).
a model financial plan it is available as well as Excel files to assist in completing this document.
How to write a financial plan
In writing this document, it is necessary to perform certain steps. The following are some considerations that the entrepreneur must have in preparing this document. However, it is necessary for the latter to be aware that there is no problem in getting help. In fact, this is one of the areas startups most have difficulty. Therefore, the practice of hiring professionals in the area to prepare this document is recurrent.
In this initial step, the entrepreneur must reflect on the goals he wants to achieve with his business. Likewise, it must identify what financial resources are needed to meet the objectives.
Collect financial data
Inevitably all the expenses that the company makes have to be analyzed. The company's net worth and debts must be identified in order to map the best directions to follow.
Establish short and long-term plans
Once the company's financial situation is analyzed, action plans must be developed. These must be short and long term. Depending on the current state, the entrepreneur will have to decide whether these plans will be drastic or not.
Lay flat in practice
It is time to implement the action plans defined in the previous step. It is important to note that the goals and objectives must be as realistic as possible. In addition, they should be checked periodically, ideally monthly.
Monitoring and updating the plan
O financial plan it is a dynamic document, as adjustments may need to be made as the business evolves. Several factors can arise in the company, causing economic instability. Therefore, financial plans need to be updated when necessary.