Significance and preparation of a financial plan

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"Financial Plan Structure"

Finance has a special place in economic relations. Their specificity is manifested in the fact that they always appear in monetary form, are of a distributive nature and reflect the formation and use of various types of income and savings of economic entities in the sphere of material production, the state and participants in the non-productive sphere.

In modern conditions, the forms of financial relations are undergoing major changes. The formation of the market and entrepreneurship in Russia presupposes not only the denationalization of the economy, the privatization of enterprises, their demonopolization to create a free economic sector, the development of competition, the liberalization of prices and foreign economic relations of enterprises, but also the financial recovery of the national economy, the creation of an adequate system of financial relations.

The finances of enterprises, being part of the general system of financial relations, reflect the process of formation, distribution and use of income at enterprises of various sectors of the national economy and are closely related to entrepreneurship, since an enterprise is a form of entrepreneurial activity. In modern conditions of market relations, there is an objective need for financial planning. It is impossible to achieve real results in the market without financial planning. Financial planning is directly related to the planning of the production activities of the enterprise. All financial indicators are based on indicators of production volume, product range, production costs.

Planning financial indicators allows you to find the internal reserves of the enterprise, to comply with the economy. Obtaining the planned profit and other financial indicators is possible only if the planned norms of labor and material resources are observed. The volume of financial resources, calculated on the basis of financial plans, eliminates excessive stocks of material resources, non-productive costs, unplanned financial investments. Thanks to financial planning, the necessary conditions are created for the effective use of production capacities, and for improving product quality. Financial planning is the process of developing a system of measures to ensure the development of the enterprise with the necessary financial resources and increase the efficiency of financial activities in the coming period. The advantages of financial planning are that it: - embodies strategic goals in the form of specific financial indicators; - provides financial resources inherent in the production plan for the economic proportions of development; - provides an opportunity to determine the viability of an enterprise project in conditions of real market competition; - serves as a very important tool for obtaining financial support from external investors. Planning helps prevent misconceptions in finance and also reduces the number of wasted opportunities. Obviously, financial planning requires specialized skills. This course work is devoted to the consideration of the main tasks and stages of drawing up the financial plan of the enterprise.

Financial plan structure

Among all sections of the business plan:

  • Cover Page
  • Confidentiality Memorandum
  • Executive Summary
  • Investment Plan
  • Marketing plan
  • Production plan
  • Organizational plan
  • Financial plan
  • Risk analysis

the finance section is responsible for providing summary monetary information. In general, all business plans can be written using different techniques and according to different requirements. Their format will largely depend on the goals of the project, its scale and main characteristics. The same differences may be present in the financial sections of such plans, however, as a rule, the process of writing this chapter can be divided into several main stages, namely:

  • Estimated standards;
  • General production costs;
  • Cost estimate and calculation of the cost of goods or services;
  • Report on the main financial flows;
  • Profit and loss statement;
  • Estimated financial balance of the project;
  • Analysis of key financial indicators;
  • Description method (methods) of financing.

The structure of the financial plan of the business plan

Calculation standards

This clause must define and describe the following points:

  • Prices that will be indicated in the business plan (constant, current, with or without taxes);
  • Taxation system, amount of tax, terms its payment;
  • The time frame covered by the business plan (planning horizon). As a rule, this period is about three years: the first year is described in more detail, divided into monthly periods, while the following years are divided into quarters.
  • Indicate the current inflation rate, inflation data for the last few years. Taking this factor into account regarding the prices of consumables, raw materials, etc. - everything that will need to be purchased for the implementation of the described project.

General operating expenses

The salary data correlates with the information previously stated in the organizational and production plans.

Variable, ad hoc costs depend on the characteristics of production, goods, services. Various factors can be taken into account here, for example, seasonality. It is possible to make correct calculations of variable costs only by analyzing the volumes of goods or services provided and the approximate levels of sales.

Fixed, regular costs depend on the only variable - time. These expenses include expenses for business management, marketing, premises support, equipment maintenance, etc.

Estimate of costs and calculation of the cost of goods or services

Creation of the necessary conditions for the effective use of production facilities, improving product quality. The main stages of drawing up a financial plan for the enterprise. Features of short-term and long-term planning at the enterprise.

The financial section of a business plan is a necessary set of documentation for organizing and a detailed analysis of aspects of the company's activities. The main indicators of the assessment are the current monetary summary of the data, as well as the determination of the sales prospects (sales volumes) in the market of goods and services.

Purpose of the financial plan in the business plan

The structure, content and goals of a financial plan in a business plan directly depends on the company for which it is being drawn up and the audience to which it will be presented. The documentation that will be used by the organization's employees to manage and promote the company's product should contain detailed summaries of the potential sources of finance and internal cash flows. But the financial section of the business plan, which will be presented to investors and customers (that is, for external use and partial marketing of the enterprise), will mainly consist of liquidity estimates, a positive analysis of solvency, profitability and other markers that will prove profitability and monetary security.

What a financial business planning plan should contain

In order to achieve the set goals of financial business planning, namely, raising money or forming tasks for the prospects and development of the company, it must contain the following points:

defining the procedure and methods for obtaining the maximum net profit from activities in the existing conditions of operating finance and the functioning of the company itself;

optimization of income and expenses, as well as other ways of investing capital to ensure and confirm the financial stability of the enterprise;

proof of financial solvency and security of the project to confirm credit independence and profitability;

creating a correct and effective cash flow management mechanism. It can include these types of policies:

When developing the financial part of a business plan aimed at foreign investors, the following features of the preparation of documentation should be taken into account:

mandatory inclusion of analysis and reporting of profit and loss for the last accounting period (the choice of time frame remains with the author of the business plan, but most often the indicators for the previous quarter, six months or a year are taken);

Among all sections of the business plan:

  • Cover Page
  • Confidentiality Memorandum
  • Executive Summary
  • Investment Plan
  • Marketing plan
  • Production plan
  • Organizational plan
  • Financial plan
  • Risk analysis

the finance section is responsible for providing summary monetary information. In general, all business plans can be written using different techniques and according to different requirements. Their format will largely depend on the goals of the project, its scale and main characteristics. The same differences may be present in the financial sections of such plans, however, as a rule, the process of writing this chapter can be divided into several main stages, namely:

  • Estimated standards;
  • General production costs;
  • Cost estimate and calculation of the cost of goods or services;
  • Report on the main financial flows;
  • Profit and loss statement;
  • Estimated financial balance of the project;
  • Analysis of key financial indicators;
  • Description method (methods) of financing.

The structure of the financial plan of the business plan

Calculation standards

This clause must define and describe the following points:

  • Prices that will be indicated in the business plan (constant, current, with or without taxes);
  • Taxation system, amount of tax, terms its payment;
  • The time frame covered by the business plan (planning horizon). As a rule, this period is about three years: the first year is described in more detail, divided into monthly periods, while the following years are divided into quarters.
  • Indicate the current inflation rate, inflation data for the last few years. Taking this factor into account regarding the prices of consumables, raw materials, etc. - everything that will need to be purchased for the implementation of the described project.

General operating expenses

The salary data correlates with the information previously stated in the organizational and production plans.

Variable, ad hoc costs depend on the characteristics of production, goods, services. Various factors can be taken into account here, for example, seasonality. It is possible to make correct calculations of variable costs only by analyzing the volumes of goods or services provided and the approximate levels of sales.

Fixed, regular costs depend on the only variable - time. These expenses include expenses for business management, marketing, premises support, equipment maintenance, etc.

Proper planning of your actions is a prerequisite for success. This rule is especially clearly implemented in relation to entrepreneurial activity. Since it is otherwise impossible to take into account the numerous aspects that influence, and sometimes directly determine the course of industrial and commercial processes.

Purpose of the financial plan

The purpose of the financial section is to form and present the financial justification for the project. The success of negotiations with potential investors and partners directly depends on how convincing the calculations presented in it look. But its purpose is not limited to this, a correctly chosen strategy is unthinkable without a detailed and well-structured action plan. Each such action is accompanied by a corresponding movement of finance, which must be calculated in advance. Errors in calculating financing can not only significantly damage the implementation of the project, but also lead to its collapse. Based on the foregoing, it is possible to concretize the aspects that should be covered by the section of the business plan related to project financing. Let's list them:

    • The financial section should give a clear and complete picture of the funds required to implement each stage of the project separately and the entire project in general.
    • It should contain information about the funds available to the entrepreneur, and which can be used to carry out a particular operation. Moreover, a financial justification must be accompanied by each operation that is supposed to be carried out.
    • Information about running costs as of the time of the business plan. This item assumes the placement of data on the funds that are spent on maintaining the functioning of the enterprise or organization, on the basis of which the project is supposed to be implemented.
    • Information about the costs required to implement the action program stated in the business plan.
    • A summary of all costs, both current and projected in the future. Based on this information, the total figure of the required investments is displayed.
    • The document should fully reflect the project financing strategy. This means that the content should include a description of potential funding sources, as well as steps to expand them.

  • This paragraph of the section should be closely linked to another paragraph in which the project strategy is embodied in financial indicators. In other words, this item sets the amount of profit that should be achieved as a result of the project.
  • The next item is a logical continuation of the previous one, since it links the share of the profit of each investor in accordance with the invested funds. It also usually prescribes options for compensation for losses, in the event that the implementation of the project is not fully achieved.
  • This paragraph provides calculations regarding the payback period of investment.

It should be noted that this document outline is approximate. Depending on the scale and specifics of the enterprise and the tasks facing it, it can change. But at the same time, the principle of its compilation remains unchanged.

Forms of the financial section of the business plan

Since one of the objectives of the plan is to convey its meaning to potential investors and partners, as well as to employees of the enterprise, the document should be distinguished by clarity and intelligibility. This can be achieved only through competent processing of the array of information contained in it. But this is not enough. In order for this information, and its volume can be very large, to be available for perception, the document must be clearly structured. If the business plan deals with the development of the enterprise, then in general terms the paragraphs of the section relating to financing should be grouped as follows:

  • Income and expense summarized.
  • Financial cash flow summary.
  • Complete information about the balance sheet of the organization or enterprise.

If this form of the financial section is used, then the reporting period, as a rule, is taken equal to several previous years if the business plan refers to an operating enterprise. Such presentation of the material allows the addressees of the document to assess the dynamics of the development of the enterprise and helps them to get an idea of ​​its capabilities.

Level of detail in the financial section of the business plan

When drawing up a financial section, it is necessary to find a balance between its informational and representative components. To do this, you need to clearly understand the purpose of a specific document and who it is addressed to.

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