Hello, dear readers of the online magazine about money “RichPro.ru”! This article will talk about how to write a business plan. This publication is a direct instruction to action, which will allow you to turn a crude business idea into a confident one. step by step plan to implement a clear task.
We will look at:
- What is a business plan and why is it needed?
- How to write a business plan correctly;
- How to structure it and write it yourself;
- Ready-made business plans for small businesses - examples and samples with calculations.
To conclude the topic, we will show the main mistakes of novice entrepreneurs. There will be a lot of arguments in favor of creating quality And thoughtful business plan that will bring your idea to fruition and success things in the future.
Also, this article will provide examples finished works, which you can simply use or take as a basis for developing your project. Ready-made examples submitted business plans can be download for free.
In addition, we will answer the most frequently asked questions and clarify why not everyone writes a business plan, if it is so necessary.
So, let's start in order!
The structure of the business plan and the content of its main sections - step by step guide on its compilation
7. Conclusion + video on the topic 🎥
For every entrepreneur who wants to develop himself and develop his business, a business plan is very important. He performs many important functions that no other person can do differently.
With its help, you can secure financial support and open and develop your business much earlier than you can raise a significant amount for the business.
Investors react mostly positively to a good, thoughtful, error-free business plan, because they see it as a way to make easy money with all the troubles invented and described.
In addition, even before the establishment opens, you see what awaits you. What risks are possible, what solution algorithms will be relevant in a given situation. This is not only favorable information for the investor, but also a necessary plan if you get into trouble yourself. In the end, if the risk calculation turns out to be too daunting, you can slightly redo, transform general idea to shorten them.
Creation good business plan - This great solution to search for investment and develop your own algorithms for action even in the most difficult situations, of which there are more than enough in business.
That is why, in addition to our own efforts It’s worth using “other people’s brains”. A business plan involves many sections and calculations, research and knowledge, only with successful operation, which can achieve success.
The ideal option would be to study all aspects yourself. To do this, it is not enough to sit and read the relevant literature. It’s worth changing your social circle, turning to courses and trainings, finding specialists for consultation on certain issues. This is the only way really figure it out in the situation and dispel all your doubts and misconceptions.
A business plan is worth writing for many reasons, but home- this is a clear algorithm of actions by which you can quickly get from point A(your current situation, full of hopes and fears) to point B(in which you will already be the owner of your own successful business stably and regularly generating income). This is the first step towards achieving your dreams and secure middle class status.
If you have any questions, then perhaps you will find answers to them in the video: “How to draw up a business plan (for yourself and investors).”
That's all for us. We wish everyone good luck in their business! We will also be grateful for your comments on this article, share your opinions, ask questions on the topic of publication.
Financial plan business plan: how to carry out calculations to analyze the financial position of an enterprise + formulas for calculating efficiency + 3 stages of risk calculation.
Business must make money. This is an unwritten rule for all entrepreneurs.
But we don't always get what we want. Due to certain circumstances, income levels may drop sharply.
The financial plan of a business plan is aimed not only at identifying holes in the project, it makes it possible to correct activities for 1 – 5 years in advance.
What is a financial plan for a business plan?
To understand what the structure of this component of the business should be, let’s figure out what a financial plan is. What goals and objectives should you pursue to improve your own project?
The financial plan is a priority section for both new businesses and market veterans.
Displays all activities in numbers, helping to increase profitability and, if necessary, adjust development priorities.
A very unstable market forces experts, when analyzing a business, to pay attention not only to mathematical calculations of a company’s potential income.
The level of demand and the social component of the sphere of activity in which its development occurs are taken into account.
High competition in the market, constant rise in prices for raw materials, depletion of energy sources - all this affects the economic component in business development. under the influence of all these factors it can be very difficult.
Purpose of the financial plan– keep under control the level between the organization’s profits and expenses so that the owner always remains in the black.
To achieve positive results, it is imperative to find out:
- size cash to supply the production process with raw materials without loss of quality;
- What investment options do you have and how profitable are they?
- a list of all expenses for materials, salaries for company employees, product advertising campaign, utilities and other provision details;
- how to achieve high profitability of your business project;
- best strategies and methods for increasing investment;
- preliminary results of the enterprise’s activities for a period of more than 2 years.
The result of efforts will be effective tool on investment management, which will make it clear to investors how stable and profitable your business is.
Mandatory reporting in financial plan sections for a business plan
In order to correctly predict the financial development of an organization, it is necessary to build on current indicators - this issue is dealt with by accounting.
3 reporting forms will help demonstrate all the nuances of the enterprise’s economic situation. Let's look at each of them in more detail.
Form No. 1. Movement of funds
Following Order No. 11 of the Ministry of Finance of the Russian Federation, each organization conducting financial activities is obliged to annually submit a report on the flow of funds through the accounting department.
The exceptions are small businesses and non-profit organizations– their performance analysis can be carried out without it.
It is almost impossible to draw up a financial plan for a business plan correctly without such reporting.
The document displays the movement of cash flows within the organization over a certain time - which is very important to know for analyzing the state of the company.
The report allows you to:
- find holes in financing and close them without stopping production;
- when forecasting in the future, use reliable information on the financial condition of the enterprise;
- anticipate additional cost items and allocate part of the funding for them in advance to avoid problems in the future;
identify cost items that are unnecessary.
Thus, there will be extra money that can be directed in the right direction;
find out how much the business is profitable.
You will be able to decide which direction will be a priority for the next 1-2 years. Where additional investment is required, and what is worth covering up.
Form No. 2. Income and expenses of the organization
Provides an opportunity to see the potential profitability of an enterprise when financing various areas of activity.
The document records all costs of running a business. There are simplified and complete forms for submitting information.
The simplified form contains:
- profit excluding value added tax and excise taxes;
- expenses for technical support of the enterprise and the cost of goods;
- interest rate payable to tax authorities and other expenses/income of the organization;
- net income/loss for the calendar year.
The purpose of using this document when you are preparing a financial plan for a business plan is to identify potential profitable directions that are worth developing in the future.
When making a forecast, consider:
- possible sales volume of the product;
- additional costs for production due to instability financial market raw materials and services;
- the amount of fixed costs for the production component.
The list will allow you to identify products that are in high demand and remove production where demand is minimal, in order to increase the cash flow of the enterprise.
Form No. 3. Overall balance
Any business plan must contain information about the assets and liabilities of the enterprise.
Based on it, the owner can assess the overall progress of business, based on the indicators of net income and cash expenditure.
Compiled at intervals from 1 month to 1 year.
Practice has shown: the more often the overall balance sheet is analyzed, the easier it is to identify problems in the business plan and eliminate them at the initial stage.
Components of a financial report:
Assets are all available funds that an organization can dispose of at its discretion.
For greater clarity, they are distributed depending on the type or placement.
Liabilities – display resources that allow you to obtain those same assets.
It is possible to use the allocated funds for future business financing.
Roughly speaking, assets and liabilities are the same indicators, but with different interpretations.
It is impossible to adjust the financial plan without this report. It helps to proactively track and eliminate gaps in the operation of the enterprise.
An integrated approach to the study of these 3 sources financial condition project will help to impartially assess the progress of affairs. Numbers never lie.
Estimated component of the financial plan
After studying the financial condition of the enterprise, you need to analyze possible risks and make calculations optimal ways making a profit in business.
Here the process should be divided into 3 stages, each of which will be discussed in more detail below.
Stage 1. Taking into account risks in the financial plan of the business plan
Risk is a noble cause, but not in business. Drawing up a financial plan is aimed at preventing unpleasant situations.
Your goal is to consider all possible outcomes and choose the path that involves minimal loss of money.
Risks are divided into 3 types according to their sphere of influence:
- Commercial– the cause is relationships with business partners, as well as the influence of environmental factors.
External commercial risk factors:
- decrease in demand for manufactured products;
- the emergence of unexpected competition in the market;
- deception on the part of business partners (low-quality raw materials, delayed delivery of equipment and goods, etc.);
- volatility of prices for services and technical support for business.
This is not the entire list external reasons that may affect the project.
You should start from the sphere of activity of the organization and adapt to each case on an individual basis.
- Financial— unforeseen business expenses or receipt of unforeseen profits.
Causes of financial risks:
- late payment for products by customers and other types of receivables;
- increase in interest rates by lenders;
- innovations in the legislative system, which entail an increase in prices for running a business;
- currency instability on the world market.
Financial risks allow you to anticipate unexpected business losses and protect yourself in advance from complete collapse.
- Production– changing the operating mode of the enterprise due to unforeseen circumstances.
Causes of production risks:
- incompetence of workers, protests and strikes that disrupt the work schedule of the enterprise;
- production of low-quality products leading to a decrease in sales;
- the production process misses such a point as checking the quality of products.
If you do not pay attention to these issues when making a financial plan, the business can suffer huge losses.
To prevent such outcomes, the owner must take preventive measures. These include risk insurance, analysis of the activity of competitors in the market and accumulation of a reserve for unforeseen financial expenses.
Stage 2. Effectiveness of the financial plan
Important stage in creating a financial plan. Business profitability and payback are the main indicators of effective activity in the market.
Analysis of these aspects will make it possible to predict the further development of the enterprise a year in advance.
Let's look at which indicators are the most significant when drawing up a financial plan:
- investments bring the predicted profit;
- inflation;
- risks of loss of investment.
- Sales ratio– percentage of income from each unit of currency.
The indicator gives an idea of the correctness of the business’s pricing policy and ability to keep costs under control.
- Return on asset– relative importance of work performance.
Allows you to see the possibility of making a profit from the enterprise.
Net present value(Net Present Value - NPV) - the amount of expected profit from calculating the cost of the product at the current moment.
Why is it necessary to calculate this indicator?
Discounted income shows the potential return on investments made in a business with an expectation of 1-2 quarters in advance.
Reasons for changing NPV:
If the calculations showed the value “0”, you have reached the point of no loss.
Business profitability – complex indicator financial efficiency of work.
The concept shows the owner how successful his business is and whether it consistently generates income.
If the value is negative, your company incurs only losses.
Profitability indicators are divided into 2 groups:
The financial plan must include measures to increase profitability through organizational and financial procedures.
Payback period– a time indicator of the period of full payback of funds invested in a business.
Based on this value, investors choose business projects, which make it possible to recoup the invested money in the shortest possible time and proceed to direct profit.
There are simple and dynamic indicators of project payback.
In the first case, this is the period of time during which the investor will receive back the invested money.
With a dynamic indicator, data on the value of money is taken into account, depending on the inflation threshold throughout the entire time.
A dynamic indicator is always higher than a simple payback period.
The table below shows the formulas for calculating the 3 main performance indicators that will be required when drawing up a financial plan for a business plan:
| Performance indicator | Formula | Description of components |
|---|---|---|
| Net present value | NPV = - NK+(D1-R1) /(1+SD1) + (D2-R2) /(1+SD2) + (D3-R3) /(1+SD3) | NK – capital of initial investments and costs. D – income for the first, second, third year, in accordance with the numbers next to it. P – expenses for the first, second, third year, in accordance with the numbers next to them. SD – discount rate (taking into account inflation for the calculated year). |
| Enterprise profitability | ROOD = POR/PZ | ROOD – profitability from core activities. POR – profit from sales. PP – incurred costs. |
| Payback period | CO = NC/NPV | СО – payback period. NK – initial investments; additional investments must be added to them, if any (loans, etc. during the existence of the organization). NPV is the net discount income of the enterprise. |
Carry out necessary calculations the easiest way is through a specialized software at your enterprise.
If you are a private owner and only then use demo versions of accounting software products. They will significantly reduce the time spent on calculations when drawing up a financial plan.
Stage 3. Final analysis
The more nuances you notice when drawing up a financial plan for a business plan, the more less problems will be waiting for you in the future.
Creating a plan from scratch will take a lot of time, it’s much easier to make adjustments weak points and bring the business to a permanent profit.
When a financial plan can be called successful:
- high income levels with minimal costs money;
- forecasting and eliminating risks at the initial stages;
- comparing the competitiveness of your idea with others;
- availability of investments and material and technical base;
- documentary evidence of the profitability of the enterprise.
Details about the formation of a financial plan
and about its main components in this video:
Business plan financial plan contains many subtleties, but we have successfully covered the basics that must be present.
The right approach to doing business starts with the simplest thing – analysis. The numbers will point out shortcomings and give a push in the right direction to improve the profitability of the enterprise.
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That is, drawing up a business plan. Now is the time the right time tackle finances as part of your business plan.
It's time to deal with money.
Finance is the most important part of a business plan
Financial section of the business plan is in last place simply because in this section we will use almost everything that we planned and analyzed in the previous sections. The financial part of a business plan should show us whether our business idea is financially viable or not, and whether it is worth it. We have planned and considered many things, including how to produce, how much money to save for salaries, etc. But now we have to check whether these plans are sustainable or not.
What should the financial section of a business plan include?
- Brief summary of the financial plan.
- Description of sources of initial financing.
- Basic financial assumptions.
- Key financial indicators.
- ROI chart.
- Showing the profit/loss forecast.
- Show cash flow forecast.
- Balance sheet forecast.
1. Brief summary of the financial plan
As always, the summary is written at the end (after other parts of the financial plan) and covers the most important features financial plan. Keep in mind that if you plan to use the business plan to obtain funds from an investor, then this section may be the most readable part business plan, since the main financial indicators are briefly described here. And this is the main thing that interests any investor.
2. Sources of financing
Here we describe all sources of financing when starting a business. In this part of the table you just need to indicate what finances you will invest, what funds you will borrow from relatives and friends, how many loans you need from banks, etc. Provide a brief explanation.
3. Basic financial assumptions
In this subsection you should arrive at some forecasts based on an analysis of the financial sector in the country and internal analysis. You will need to provide the following assumptions:
- Changes in interest rates.
- How many days will you defer payment?
- On what schedule will you make payments?
- How much is the tax?
- What will the costs be?
- What percentage of sales will be on the loan?
All these assumptions will be used for further analysis. So make sure these assumptions are as accurate as possible. Look for information on the Internet, State Statistical Office, Central Register, banks, etc.
4. Key financial indicators
This is a simple graph, already described in the business plan summary, and which gives us a picture of what the sales volume, gross margin movement and net profit of the enterprise will be. In the sales strategy, we have already assessed the sales and costs associated directly with this sale, i.e. direct costs. This data should be used here. In the spreadsheet, also collect overhead costs such as wages, rent, operating costs... The sum of these direct and overhead costs is the total cost per year. Gross margin will be the difference between revenue and total cost of sales (direct expenses), and net profit will be calculated by subtracting all expenses and taxes from total sales revenue.
Read also
Make a graph where you place sales and expenses as shown below.
Key financial indicators of the business plan
5. ROI chart
In simple words, profitability is the amount of money that is needed to cover all the expenses of the enterprise. Profitability analysis will tell us how many units of products or services we must sell to cover expenses (so as not to operate at a loss). The purpose of this analysis is to find the ROI point, which will indicate at what level the business will be profitable and at what level unprofitable. You must know the direct and variable costs of your business.
For example, if general expenses- 20,000.00 rubles, and the retail margin percentage is 16.67%, the profitability point will be 20,000.00 / 0.1667 or 120,000.00 rubles. This means that you need to have an income of 120,000.00 rubles per month to cover all expenses and not incur losses. It is recommended that the business plan present this graphically, as shown below.
Financial Plan - Sales and Cost Schedule
6. Profit/loss forecast
In this subsection you must give brief description and a profit/loss spreadsheet that will cover all costs. That is, you just need to make a table with forecasts of sales (income) and costs (expenses) to calculate profits/losses.
7. Cash flow analysis
In this section of your financial plan, you should display a cash flow graph that will show you (and the investor too) how cash will flow in your business. Provide a brief comment on the results of your analysis.
Cash flow tells us how much money we are currently able to spend on the business. What expenses may be: raw materials for production, purchases of products for enterprises retail, salaries for employees, loan repayment, financing... If there is no cash, you will not be able to purchase raw materials for production or products for sale. We will not pay salaries to employees, and we will not have money to pay the installments on loans, we cannot finance business growth... etc.
Again, note that there are businesses that make a profit. But this profit is paper, and they go bankrupt because they lack funds. This result is due to some of the following:
- Uncontrollable expenses of an entrepreneur. Spending more than there is cash flow. We're talking about cash here, not income, because there may be income, but there isn't cash.
- The company operates without cash flow analysis.
For example, we may have income from entrepreneurial activity at 100,000.00 rubles, 50,000.00 of which you receive over the next 3 months. So we now have 50,000.00 rubles in cash. The supplier sells the goods at a cost of 80,000.00, and we are not able to ensure a repeat sales cycle. At the same time, we will not be able to satisfy consumer demand, and sales will begin to decline.
Cash flow is formally the movement of funds in or out of the business cycle (i.e., cash inflows and outflows), which actually determines the solvency of a business.
Cash flow analysis is the study of the cash flow and outflow cycle of your business.
To summarize, let's look at everything that can affect cash flow:
- Initial funds.
- Sales (for each month or an estimate of sales in the first month and the percentage of sales growth from month to month).
- Cost price products sold; % of sales can be used to analyze cash flow.
- Sales on credit - % of consumers who buy on credit.
- Number of days until deferred payments are received.
- Profitability - % of sales.
- Beginning inventory balance is the amount of supplies you buy before you start selling.
- Months for which the item is in stock - number of months.
- Primary debts are the amount of money you owe at the beginning of the analysis.
- Primary expectations are the amount of money we expect to be received. For beginners it is zero.
- Days to pay bills - the number of days after which you must pay bills.
Before you begin your cash flow analysis, you must complete the sales forecast and estimation section. Because without it, you do not have the data from point 2. What is also important is what percentage of total sales on credit, as well as the period for which the money will be converted into cash. On the other hand, for a qualitative analysis of cash flows, it is also necessary to know the timing of payment of obligations.
The illustration below shows the cash flow analysis for the first year.
Cash flow in the financial section of the business plan
From the picture you can see:
- Total cash inflow. This is all the cash that comes into the business, both from sales and other sources.
- The total amount of cash outflow. This is money for the current month for purchases, payment of fees, wages...
- Cash balance at the end of the month. This refers to how much money you have in cash at the end of the month and therefore what the input element is for the next month.
- Monthly cash flow. Red color shows cash flow for the month and indicates whether we have spent in the current month more money than we received.
- Profit at the end of the month.
It's interesting to note two things:
In April, July, October and November we have negative cash flow, but profits are realized.
In January, where we have positive cash flow, we suffer losses.
This tells us that profit and cash flow are not directly dependent on each other. Therefore, we have positive cash flow when there is a loss and negative cash flow when there is a profit.
8. Balance sheet forecasts
In this section we briefly list the main balance sheet indicators. The balance sheet is a test of the financial position of a business, and most financial lending institutions will pay the most attention to this section. The balance sheet contains the assets of the business, as well as liabilities and personal capital.
FINANCIAL SECTION - one of the most important sections of a business plan, as it is the main criterion for acceptance investment project to implementation. A financial plan is necessary to control the financial security of an investment project at all stages of its implementation and reflects upcoming financial costs, sources of covering them and expected financial results, as well as the results of calculations that are carried out during its development in a certain sequence.
The financial section of a business plan includes several main documents: the organization’s balance sheet, profit and loss plan, cash flow forecast, operational plan, income and expense plan. These documents are of a planning and reporting nature; such planning is carried out on the basis of a forecast of the future activities of the company within a certain period of time, and the data provided in these documents is used to analyze the financial condition of the company.
Let us briefly describe the main documents included in the financial section of the business plan:
Operational plan- reflects the results of interaction between the company and its target markets for each product in their market for a certain period; at the company, this document is developed by the marketing service. The set of indicators presented in the operational plan helps demonstrate to the company's management what market share the company occupies for each product and what it is expected to conquer. The structure of the income and expense statement is relatively simple, it usually includes revenue from the sale of goods, production costs, taxes and other deductions. Based on these indicators, the profit remaining at the disposal of the company after the payment of dividends is calculated; according to the data in this section, it is possible to determine whether a particular product is profitable, compare different products in terms of profitability, in order to determine the feasibility of further production. Thus, the final task of this document is to show how profit will change and be formed during the first and second years quarterly and then on an annual basis. Plan - cash flow report shows how much cash the company has at its disposal and what the company's need for it is. This report is compiled as a summary result of the company’s activities for all types of goods and services; its structure, in particular, includes planned and actual investments in the company’s activities for the reporting period. The final document of the financial plan is the balance sheet; its peculiarity is that it does not reflect the results of the company’s activities for a certain period, but records the strengths and weaknesses from a financial point of view at the moment. Any single element of the balance sheet by itself means little, but when all these elements are considered in relation to each other, it allows us to judge the financial position of the company. It is quite easy to create such a report: it shows how the start-up capital will be received (source of debt + equity) and how it is expected to be spent. When projecting a balance sheet for a further period, the initial balance sheet must be taken into account, as well as the peculiarities of the company’s development and the results of its financial and economic activities.
An important component of the financial section of a business plan is identifying sources of capital, necessary for the activities of the company. This part of the financial plan is relevant both for small companies just entering business, and for large enterprises needing additional capital inflow. Data on sources of capital are linked to the use of funds with specific indications of the methods and directions of use of capital.
You can also imagine the following version of the structure of this section of the business plan in terms of R&D.
1. Current state. You should describe the current state of each product or service and explain what still needs to be done to bring it to market. It is useful to indicate what skills the business has or should have to perform these tasks. If possible, customers or end users who are involved in the development and testing of products and services should be listed. The current results of these tests and when the finished product is expected to be received should be stated.
2. Problems and risks. Highlight any major perceived problems in the design of the product under development and approaches to solving them. Rate possible impact of these problems on product development costs and time to market.
3. Product improvements and new products. In addition to describing developments and original products, include improvements planned to maintain their competitiveness and efforts to create new products and services that can be offered to the same consumer group. Indicate the consumers who are participating in these developments and their opinion about the prospects of the latter.
4. Costs. Provide an estimate of R&D costs, including wages, materials, etc. Please note that underestimating this estimate may affect expected profitability, reducing it by 15-30%
5. Property issues.
Please indicate any patents trademarks, copyright that you own or are about to acquire. Describe any contracts or agreements that give you exclusivity or ownership rights to designs or inventions. Describe the impact of any unresolved issues, such as ownership disputes, on the competitive advantage you have.
It is also worth noting that this area of activity requires significant capital investments, the presence of highly qualified specialists and managers, a high degree of production specialization; small companies just starting out in business are often content with using already existing developments, certain production technologies and goods. The business plan also provides risk assessment and insurance. No plan provides a guarantee of success. A condition for skillful management of provided resources is accounting possible risk implementation of the project. Risk is the likelihood of obtaining a positive result in business activity. Here the size of the risk (possible losses during the implementation of the project), the probability of the risk, and the degree of controllability of a specific risk are established.
In the financial section of the business plan, the investment risk is also calculated. Naturally, the business plan will look much more attractive if it reflects the investor’s gain in terms of minimizing losses and obtaining the planned profit, therefore, in planning it is necessary to provide a general assessment of the commercial risk, predict what the degree of risk associated with investment in the project. Along with the need to predict risk in the plan, the manager of an enterprise must have knowledge of the basic principles of risk reduction:
* effective forecasting and systematic planning of company activities,
* insurance and self-insurance,
* hedging futures transactions,
* issue of options, diversification.
The financial justification of the project is a criterion for making an investment decision, so the development of a financial plan must be carried out especially carefully. The goals and objectives of forecasting the financial and economic activities of an investment object are, first of all, to assess costs and results expressed in financial categories.
The financial section of the investment project consists of the following points.
1. Analysis of the financial condition of the enterprise during the three (or better yet five) previous years of its operation.
2. Analysis of the financial condition of the enterprise during the preparation of the investment project.
3. Forecast of profits and cash flows.
4. Assessment of the financial efficiency of the investment project.
Let us dwell briefly on each point of the financial section of the investment project.
Financial analysis of the previous work of an enterprise and its current position usually comes down to the calculation and interpretation of basic financial ratios that reflect the liquidity, solvency, turnover and profitability of the enterprise. Financial ratios characterizing each planning period are calculated, then the ratios are analyzed over time and trends in their changes are identified. An investor, before investing in a specific project, analyzes its functioning (activity) in order to assess the future state and development prospects, and the effectiveness of investments. The indicators (coefficients) used to analyze and evaluate an investment project are not limited to those discussed below, since there is no set of them that would fully meet the objectives and satisfy all the goals of the analysis.
The predicted financial indicators and project efficiency obtained as a result of calculations can be presented in the business plan in the form of a table.
Project performance indicators
Solvency ratios are used to assess a firm's ability to meet long-term obligations. Turnover ratios make it possible to evaluate the effectiveness of operating activities and policies in the field of prices, sales, and procurement. Profitability indicators are used to assess the current profitability of the enterprise of a participant in an investment project.
The values of the relevant indicators must be analyzed over a number of previous years and the main indicators compared by year. The list of coefficients is determined by the characteristics of the project.
Forecasting profits and cash flows during the implementation of an investment project and assessing the financial efficiency of the project includes:
Assessment of the cost of capital raised for the implementation of the investment project;
Drawing up a consolidated balance sheet of project assets and liabilities;
Profit/loss and cash flow forecast;
Assessment of project financial performance indicators.
The assessment of the financial efficiency of the project is carried out taking into account the principle of “time value of money”. This principle states: “A ruble now is worth more than a ruble received in a year,” that is, each new cash flow received a year later has a lower value than an equal cash flow received a year earlier. Therefore, all inflows and outflows received at different stages implementation of the project are reduced to today's (current) value by discounting. This allows you to compare them and calculate the main indicator of the financial efficiency of the project - NPV (Net Present Value) - net current (or present) value.
To analyze the feasibility of implementing a project, there is a need to forecast inflation rates for the entire duration (by periods) of the investment object. In this case, it is advisable to accept several alternative forecasts - pessimistic and optimistic.
When forecasting the financial and economic activities of a project in a business plan, the net profit from the implementation of the project and cash flow are calculated, and a project balance sheet is compiled (taking into account the assets and liabilities of the balance sheet). These are the three basic forms of financial reporting. Based on all the calculations carried out, three documents are developed:
1. plan of income and expenses;
2. plan of cash receipts and payments (cash flow);
3. plan-balance sheet of assets and liabilities.
Based on an assessment of the effectiveness of the investment project, investors and other participants make decisions on investing, exiting the project, adjusting its parameters, implementation conditions, possible ways increasing efficiency, etc.
The financial plan in a business plan is responsible for planning cash flows in the process of doing business. The success of the business largely depends on how competently and realistically the financial part is drawn up. Read about this in our article.
What is the financial part of a business plan
The financial plan in a business plan is the part of the business plan that is responsible for the financial support of the remaining sections. The financial plan determines how much each of the points of the business plan will be implemented.
The purpose of a financial plan in business planning is to calculate such a positive balance between income and expenses in which this business it will be advisable.
Structure of the financial section of a business plan
Each component of the structure serves an end purpose. If at least one is not worked out, proportionality will be violated, and the entire financial plan will turn out to be impracticable. It is appropriate to calculate the financial part of a new business 2-3 years in advance.
Sales forecast
When drawing up a business plan, you must definitely think about what niche the new enterprise will occupy. It’s better to prepare the ground in advance: verbally agree with possible partners, enter into an agreement with clients or start leading a group on VKontakte / Instagram, survey consumers in thematic groups.
Estimation of profit and loss
This item consists of the following indicators:
- income from sales;
- production costs;
- total profit;
- general production expenses;
- net profit (minus costs).
In this part of the financial plan, the main thing is to reflect how profit will change and over what period of time.
Cash flow analysis
Profit is the main goal of business. But often an entrepreneur faces a problem when, despite good profits, there is not enough cash. . A common mistake: a businessman invests in business development most of earned money, which increases the share of low-liquid capital in total assets (building, land, extensions, cars are on the balance sheet, but they cannot pay bills).
Annual balance sheet
The balance sheet is prepared at the end of the year. The balance between assets and liabilities is important not only for banks when applying for a loan, but also for an entrepreneur. It is important for a business to invest in the development of the enterprise (production, marketing), but the bank is interested in fixed assets, against which it will issue a loan.
Important! In your calculations, take into account estimated prices, the taxation system, planning periods, risk factors, as well as inflation and possible currency fluctuations.
How to determine the “golden mean” in planning? How much of the income should be allocated to production facilities? Or maybe buy another car or invest in advertising?
Experts talk about the optimal distribution of income: 40% - 40% - 20%.
40% of income pays current bills, i.e.:
- permanent (rent, gasoline, utility bills);
- variables (depreciation of machines, repair and replacement of equipment);
- targeted needs (taxes, salaries and other deductions).
- for business development (expansion offline or online, other startups, promotion);
- investment (purchase of real estate, land, buildings, shares).
20% of income is a “safety cushion” in case of unexpected expenses in the form of bank deposits or cash.
Obviously, in the first year of operation there will be an imbalance in the distribution of funds, but to run a business comfortably, you need to strive for this model.
Financial indicators of the business plan
Financial indicators are a quantitative expression of production and marketing indicators that objectively reflect the state of affairs in the business.
Financial indicators are necessary for both banks and entrepreneurs, since they allow them to calculate their own liquidity and help in managing the enterprise and employees.
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Main financial indicators |
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Investment costs (RUB) |
The sum of all funds invested in the project = own + borrowed funds |
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Operating costs (RUB) |
Amount of daily expenses, fixed and variable |
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Gross revenue (RUB) |
Total profit minus production cost |
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Own funds (rub.) |
Personal funds invested in business |
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Taxes (RUB) |
Tax burden taking into account the taxation system |
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Net profit (RUB) |
The amount of gross profit, other operating profit and from financial transactions minus taxes |
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Product profitability, % |
Krp = profit before tax / cost of goods sold * 100% |
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Return on assets |
Kra = net profit/total assets |
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Return on equity invested in business |
Krss = net profit/average equity capital * 100% |
These are simple financial indicators. The more complex the enterprise, the more in-depth financial analysis is necessary for an objective picture. Of course, drawing up a high-quality financial plan requires effort and time - sometimes to the detriment of other important matters. Outsourcing some of your routine tasks will help you find an opportunity for a full analysis.
Sample financial plan in a business plan
There are templates and diagrams on the Internet for drawing up the financial section of a business plan to help an entrepreneur.
An example of calculating a financial plan in a business plan. Project "Kotokafé"
Condition: there are no establishments of this type in the city. Cats from the city animal shelter are selected for sale. An agreement is drawn up with the shelter. Cafe area 50 sq.m. – a room with 2-3 tables (drinks and snacks), a room for playing with cats and board games, a resting area for cats where they can hide, eat and rest.
Tax system – simplified tax system, UTII
1. Approximate sales volume.
“Kotokafé” is a kind of anti-cafe, the time spent in the establishment is paid for: the first hour - 200 rubles, the second - 150, the third and further - 100 rubles per hour per person. From the edible side, you can order drinks in cups with a lid; at the bar there is only a mixer, a coffee machine, a water cooler and snacks. In order to avoid problems with the SES and work without a kitchen, an agreement was concluded with a catering company for the delivery of sandwiches and burgers. The establishment is designed for small companies or families: the average check for a company of 4 people for three hours is from 2,000 rubles. The approximate number of checks is 10-15, depending on the day of the week. The planned minimum revenue per day is 30,000 rubles, per month – 900,000 rubles.
2. Profit and loss assessment and cash flow analysis
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Receipt and expense transactions |
Amount, 1 month, before opening |
Amount, 2 months, after opening |
Amount, 3 months, after opening |
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Own funds |
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Borrowed funds |
1,000,000, for 3 years at 12% |
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Profit from sales, 1 month |
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Opening costs: individual entrepreneur registration – 8,000; designer services – 15,000; contracts with the veterinary service, cat shelter, selection of friendly cats, vaccinations, preparation of animals “for work” - 50,000; renovation of premises - 400,000; purchase of equipment (carpets, pillows, low sofas, interior items, installation of wooden crossbars for cats, toys, board games) – 200,000; coffee machine, cooler, mixer – 100,000; marketing campaign – 150,000; installation of a video surveillance system, agreement with a security company – 100,000; online cash register and software – 30,000; other – 25,000. |
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Fixed expenses: hiring of employees: 2 administrators, training, salary 20,000; gasoline – 5,000; rent – 150,000 (regions); utility bills – 50,000; agreement with an animal waste disposal company – 10,000; catering contract – 100,000; replacement of toys, board games – 5,000; |
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Target expenses: taxes, UTII interest payment on loan |
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TOTAL: |
Income – 1,500,000 |
Income – 900,000 |
Income – 900,000 |
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Consumption – 1,293,000 |
Consumption – 522,000 |
Consumption – 595,000 |
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3. Calculation of profitability
Note that the return on assets is low: the ratio of net revenue to the value of own assets (consisting of all purchased equipment), since the property is rented. However, the forecast for net profit is not bad - 30% of revenue. From the point of view of financial indicators and under current conditions, the Kotocafe project will pay for itself in approximately 7-8 months.
Checking your financial plan
The consistency of the numbers on paper can only be verified by implementing the project.
At the end of the quarter, specialists will provide you with competent accounting assistance in preparing reports for regulatory authorities.
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