Financial business plan - what is it and what is it? Complete guide to compilation
Drawing up a business plan is what a future entrepreneur should do at the stage of planning his business in order to calculate how much money is needed to start, what is the approximate profitability of the business and what kind of profit can be expected approximately.
The financial plan of the business plan is perhaps the most important part of the document, since the effectiveness of the business largely depends on the accuracy of the calculations. Therefore, further we will consider in detail what financial models are, what is the structure of such a document, how to draw it up correctly.
Features of different financial models
In business, the term "financial model" has been used quite actively lately, since it allows you to clearly show the economics of the project, its profitability. In other words, financial modeling allows you to assess the effectiveness of a project and understand whether it is worth investing money there or not.
The classification of models implies their division into 2 large groups:
- For strategic decisions - such models are created to predict the profitability of investment projects, determine the value of a business, develop microeconomic forecasts, and similar operations.
- For making tactical or operational decisions - changing the motivating part, purchasing, introducing optimization processes for certain lines of business, and so on.
What is the financial part of a business plan?
The financial plan of the business plan is the part of the document that reflects all the numbers of the business, its profitability, development priorities and start-up costs. That is, everything that can be analyzed in business in terms of numbers and the amount of money - invested and earned.
The main purpose of the financial part of a business plan is to control the balance between profit and cost, and this, in turn, allows the entrepreneur to "keep his finger on the pulse."
The financial part of the business plan must contain the following:
- Investment options and how profitable they will be. If, of course, investment will take place.
- Start-up costs - start-up capital and monthly costs.
- List of all expenses - for production, purchase of materials / raw materials, salaries for employees, taxation, and so on.
- Estimated income and profit.
- Payback period.
- How is it supposed to increase income.
- Methods of increasing investment.
- If there was a loan, then its maturity, interest.
- Preliminary analysis of activities for the next 2 years of work.
Having done this work, you can get an effective tool and an almost step-by-step work plan for business development.
Business must constantly develop and increase its turnover, but sometimes there is not enough profit or money from the owners, then you have to apply for loans to the bank. The bank will request a business plan to understand whether you can repay the debt and how promising your ideas are. We will tell you how to draw up a business plan for a loan.
What is a business plan
A business plan is a document that contains a detailed description of the future business with calculations and prospects for several years. Everything is described in the plan: revenue, cost of goods and services, profit, tax burden, situation on the market of raw materials and sales, etc.
Many tables with calculations, payment schedules, statistical diagrams are added to the business plan. Excel is used for this, but there is also special software, for example, Alt-Invest.
A business plan is usually required for large loans - from 100 million rubles. With a smaller loan amount, the bank can request a feasibility study (FS).
Why does the bank need a business plan
Banks request a business plan for lending to assess the prospects of the project and its payback period. According to the plan, the bank concludes that:
the maximum amount that can be lent;
interest payment order and loan body.
A business plan for a loan is not always needed. It is much easier to carry out a financial analysis and determine the debtor's creditworthiness from his financial statements, because this is a fact of activity. The bank needs a plan when:
when expanding an existing business;
The first thing that is important to understand when starting a new project is that the costs of starting a business should be necessary, and the less there are, the more efficient the launch will be.
When preparing a business plan, it is impossible to take into account everything - errors, overlaps and unforeseen expenses will arise in any case. You need to be ready for them and have some kind of supply of financial resources.
Most people who have never done business before are captivated by a significant amount of misconceptions about entrepreneurship. Basically, these ideas are associated with external manifestations and are rather far from really significant things.
The real scourge of business plans for aspiring entrepreneurs is furniture and office equipment. For some reason, people believe that it is copiers, fax machines and office chairs that will make their business real.
These are the expenses that more experienced businessmen cut in the first place. The first furniture is bought at Avito, the laptop is brought from home. Recently, not everyone has rented an office, preferring to work at home or in public spaces - the so-called "third places" (the first is at home, the second is work). In the language of entrepreneurs, this is called the phrase "cutting cost", from the English word "costs".
It is necessary to look at the estimate of starting a business as critically as possible. Exclude from it everything that can be excluded. Add only what is really needed. If something suffers, you need to postpone the purchase until the first income.
Many business projects never take off, and purchased tables and chairs have been lying on the balconies of failed directors for years. The less you invest in starting a business, the faster you will go to profit if everything works out and the less you will lose if you fail this time.
Service development costs
Almost any service is a simpler business in terms of startup costs. After all, many services require little or no infrastructure. Starting a marketing agency or accounting firm, a small dispatching office or a design office will always cost less than opening a store or restaurant that needs space, equipment, inventory, and so on.
We can say that it is easier to start a business on services. Especially if you don't need a sales office for this. At the same time, the cost of a sales office is still easier to optimize than, for example, a store, production, hotel or restaurant.