When writing your financial plan it is important to be as realistic as possible; try not to let your enthusiasm for your new venture interfere with producing legitimate financial figures. If you are a new startup with few similar competitors, then generating these numbers will be a bit more difficult than if you are entering a market that already has a few competing firms. If firms do exist, try to find numbers they may have used to refer to in your own financial plan to see how you measure up. Additionally, if accounting isn’t in your background, it is highly recommended that you have a professional accounting firm review your financial plan to check for accuracy.
The main components of this section will be your balance sheet, income statement and statement of cash flows, which will be pro forma statements. Based on these, you build your financial section around the numbers. It is also important to point out key financial ratios, break-even analysis, and emphasize the assumptions you are making in providing your financial expectations. In this segment you will also want to address how much money you personally have invested, as well as other financial backing you may have procured to this point. Investors want to see that you have “skin in the game” (your own money invested, to show you have something to lose as well) and if you have piqued the interest of other investors, it sends a positive signal to other investors.
Visit the following pages to see examples of what each pro forma should look like:
Pro Forma Balance Sheet
Pro Forma Income Statement
Financial Plan Example
In 2010, SI Co is projected to do 5 jobs, which includes putting up solar panels. The process includes everything an individual would need in order to obtain the use of solar power. This includes the battery, converters, and solar panels. SI Co estimated a cost of $45,000 for a 4,000-watt solar system. It costs an average of $9 per watt to have a company put up solar panels; where as it would cost an individual $7 per watt to put it up independently (solar-electric.com Nov. 3, 2008).
The net sales for the first year will be $225,000. This includes the $9 per watt, which is what SI Co will charge per watt to put up solar panels. On average, the size of the solar systems will be about 4,000 watts per job. Then SI Co will be taking $9 times 4,000 watts, which equals $36,000. Another fee that will be added to the total cost of the job will be $9,000, which is $36,000 times 25 percent (solar-electric.com Nov. 3, 2008). This added fee includes the battery pack system for a total of $45,000 per job on average. The costs of sales for the fist year will be $175,000. This includes the 5 solar panels jobs, which is $7 per watt, which is what SI Co will pay for the solar panel system. Taking $7 multiplied by 4,000; which equals $28,000. SI Co then takes 25% multiplied by $28,000, which is $7,000. The 25 % comes from the charge of having the battery-based system (solar-electric.com Nov. 3, 2008). The total cost of sales for SI Co will be $35,000 times 5 jobs, which is $175,000.
Continue reading this Financial Plan example. Please note, this section is part of the Operations Plan for this particular business plan example.
Or visit Business Plan Examples for additional financial plan examples and information on other sections of a business plan.