The goal of a business plan is to present all the key points of a new business to potential investors. The plan should also provide additional materials to potential investors, such as a resume of key employees or sample marketing materials. It is also beneficial to include past sales and financial performance. Having a successful business is every entrepreneur’s dream.
Financial statements
In order to understand a business’s financial health, you need to have a clear understanding of the various financial statements. The first set is called the balance sheet, which shows a company’s assets and liabilities as of a specific date. The next set is known as the profit and loss statement, which show the company’s financial performance over a period of time.
The financial portion of a business plan should follow generally accepted accounting principles, as set by the Federal Accounting Standards Advisory Board. It should be presented in spreadsheets and may require external help, such as an accountant or a financial advisor. These professionals are familiar with financial statements and can help you make them look as good as possible.
Profit and loss statements show the earnings of a business earns after incurring expenses. A break-even analysis tells you how long it will take for the business to recover its costs. It is also necessary to include a personnel expense forecast, which is an estimate of the expenses of managerial personnel. Including this information is critical when seeking financing for a business.
The third type of financial statement is called the cash flow statement. It describes a company’s ability to generate cash and complements the income statement and balance sheet. In addition to preparing the financial statements, a business plan should also provide a cash flow statement. This statement enables investors to compare the company’s performance against that of similar companies.
The balance sheet details the assets and liabilities of a business. Assets include cash on hand, inventory, equipment, and property. Liabilities, on the other hand, include business loans, credit lines, and accounts payable. The total value of these three categories is known as the net worth or equity of the company. This figure can be used as a reference in determining whether a business is viable.
The income statement should also include accounts receivables. These are the assets that a company expects to sell for cash within a year. These assets include equipment and raw materials. They can be tangible or intangible.
Executive summary
The executive summary of a business plan should be short but concise, and present relevant details. Ideally, the summary will be written to complement the full plan and not contradict it. In addition, it should avoid repetition of content from the full plan, which wastes space. The executive summary should also contain key messages and market analysis, along with financial, implementation details, and competitive analysis.
For young startups, it’s important to include evidence of traction, such as consumer surveys and early sales numbers. While this early success might not be huge, it shows that the business model and product/service have a strong chance of success. If you’re in need of investment money, it might be a good idea to include the amount you need to secure the funding.
The executive summary should be short, ideally less than two pages. However, you can make the executive summary longer if you absolutely have to. Alternatively, you can opt for the Lean Plan format, which allows you to write an executive summary in one page. You must remember that the purpose of the executive summary is not to explain the entire business plan but rather to stimulate an investor’s interest and motivate them to invest in your business.
The executive summary is a quick introduction to the business plan, which should include a description of the business, its target market, and financial highlights. In addition, it should grab the reader’s attention and give an idea about how the business will grow. Oftentimes, the first decision investors make is based on the executive summary.
While writing the executive summary, keep in mind that it needs to be consistent with the rest of the plan. Ensure that the facts and numbers in the executive summary are consistent with those in the rest of the plan. Your executive summary should also contain citations to research that will back up the main points of your business plan.
