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How to Create a Financial Business Plan



How to Create a Financial Business Plan

A financial business plan is essential to help your small business. These important documents are put together to help your business plan for the future. Make no mistake. This part of your business plan might look like accounting but a financial business plan is designed to look forward.

Here’s how to put one of these plans together.

Important Parts of a Financial Business Plan

First off, it’s important to remember these don’t necessarily follow any kind of sequence. Although they include profit and loss statements, a balance sheet and cash flow statements, you might jump back and forth when you first start putting one of these together.

For example, when you put together a cash flow, the numbers might tell you that you need to go back and rejigger your estimates for expenses and sales.

That said, there are some important benchmarks you’ll need to cover when you’re putting together one of these financial business plans.

Sales Forecast

Using a spreadsheet is the best way to put together a sales forecast. You’ll want to forecast the sales for your small business over the course of three years to attract investors and lenders. For the first year, you want to set up columns for sales monthly. Afterwards, you can go to a quarterly basis for years number two and three.





Expenses Budget

Putting together and expenses budget will help to balance out your sales forecast. In a nutshell, this will tell you how much money it’s costing to produce what you’re selling. This will have a variety of different categories including leased equipment and utility payments. Of course, you can’t forget other items like payroll and rent as well as depreciation on any equipment that you use.

Cash Flow Statement

When you put the sales forecast and the expenses budget together, you get a cash flow statement.

“The cash flow statement is often overlooked but it provides a good summary of what’s going on in the other financial statements. It tracks the changes in the balance sheet as well as incorporates PL and Equity statement items,” Steven Vertucci, CPA Audit Partner ,MaloneBailey, LLP, wrote in an email to Small Business Trends.

This is one of the underpinnings of any financial business plan. It’s the fulcrum that many lenders will look at that you can use to gauge your projected success or failure going forward. The cash flow statement is important to show you where you need to tweak your business model — what you can keep and what needs to be discarded.

It’s based at least partially on all the other elements in your financial plan. Experts suggest that if you have a business that’s been running for a few years, you can use profit and loss statements and balance sheets from the past.





If you’re a start up you need to break down this part of your financial statement into 12-month pieces.

Robert Riordan is a CPA. He also emailed some comments to Small Business Trends on the importance of putting a financial business plan together.

“Learn to go over all the numbers and watch where the expenses are going. Know what a budget is and follow it. Learn how to apply financial ratios to see where your business is going. Try to look at your financial statements every month to see where you are at. Its great information to help you succeed in Business.”



Income Projections

Once you’ve put these pieces of the puzzle together, you can start making some income projections. The idea here is to round up the numbers that you put together in the previous categories. In a nutshell, this is the money that you think your company will make in one year.



It’s important for potential investors, lenders and your own plans as a small business owner.

Projected Balance Sheet

As you’ve probably guessed by now, putting together a good financial business plan is a step-by-step process and it needs to include a projected balance sheet. This is another way that you can cover all the different bases and take educated guesses at your money situation looking forward.



You need to deal with assets and liabilities you haven’t already covered so you can come up with a projected net worth at the end of your fiscal year.

These are all educated and researched guesses about what your money situations going to look like for your small business.  Putting a good financial business plan together gives you a roadmap of the money trends that you can expect.



The idea is to be able to pin down a breakeven point as best as you can. That’s the financial pinnacle where sales equal expenses. If you’re looking for a business loan, investors will be very interested in how all these numbers come together.



Here’s a final piece of advice. Many small businesses put one of these financial plans together and then leave it in a figurative drawer where it’s forgotten. It’s best used as a financial tool and a reference point. In fact, filling in the numbers in some areas like the profit and loss statement monthly and then comparing them to the income projections is a good idea.

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Rob Starr


Rob Starr Rob Starr is a Staff Writer for Small Business Trends. Rob is a freelance journalist and content strategist/manager with three decades of experience in both print and online writing. He currently works in New York City as a copywriter and all across North America for a variety of editing and writing enterprises.

One Reaction

  1. Aira Bongco

    Financials are important for it will let you know if you will make money or not. You’ll want to know how long it will take to get your ROI.

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