Exploring Financial Needs

Finance is important to set up a new business, or to upgrade business standards. One way to explore financial needs for business is through financial planning in a business plan. Financial planning helps managing expenses, controls spending and maximizes saving for an optimum budget in a business. The Money Financial plans come in three parts: income statement, cash flow projection, and balance sheet. Income statements are a statement of business profit or loss. Cash flow projection is a report describing cash flow in or out of the business. Balance sheet is a summary compiling the first two parts. Tips on Writing a Financial Plan • Be honest. Do not include reports with false statements. Do not try to impress viewers with overly expressive figures. An experienced business plan analyst can detect easily if there is any dishonesty in the plan. Justify your financial figures in exact or real situation. Say it as it is will bring more creditability to your business plan. • Stay old-fashioned. Use standardized financial sheets, fonts. Stick with a black-and-white basic statement. Financial plans should be clear and easy to view. Adding too much spice, using shades or color fonts will do no good. • Choose the appropriate accounting basis for your financial plan. There are two types: accrual basis or cash basis accounting. Accrual basis accounting records original transactions on a sale, not considering whether you received the cash. Cash basis – 18 – accounting, on the other hand, records transactions on the day when receiving full payment by clients or customers. • Be consistent. Use the same method for all accounts or financial reports. If not, it will confuse you and viewers of your business plan. Financial plans should be realistic, and contain factual information. Your financial planning will be accurate if you have done efficient research about it and present it appropriately on your financial plan.