The financials should be developed after you've analyzed the market and set clear objectives. That's when you can allocate resources efficiently. The following is a list of the critical financial statements to include in your business plan packet.
Historical Financial Data
If you own an established business, you will be requested to supply
historical data related to your company's performance. Most creditors
request data for the last three to five years, depending on the
length of time you have been in business.
The historical financial data you would want to include would be your company's income statements, balance sheets, and cash flow statements for each year you have been in business (usually for up to 3 to 5 years). Often times creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage your business is at.
Prospective Financial Data
All businesses, whether start-up or growing, will be required to
supply prospective financial data. Most of the time, creditors will
want to see what you expect your company to be able to do within
the next five years. Each year's documents should include forecasted
income statements, balance sheets, cash flow statements, and capital
expenditure budgets. For the first year, you should supply monthly
or quarterly projections. After that, you can stretch it out to
quarterly and/or yearly projections for years 2 through 5.
Make sure that your projections match your funding requests. Creditors will be on the lookout for inconsistencies. It's much better if you catch mistakes before they do. If you have made assumptions in your projections, be sure to summarize what you have assumed. This way, the reader will not be left guessing.
Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).
For more information on how to develop your financials, check out Financial Management.
Information courtesy of the Small Business Administration.
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