Business Plan Templates and the Financial Section of Your Business Plan

By: Eric Powers Click author's name for more of his/her articles

How a Template Can Help You

Using a template suited to your business sector and created by a reputable company, can eliminate a lot of time putting together the outline, format, table of contents, and, especially, financial model. Although there is still a great deal of work you must do, even with a template, many hours are eliminated from your preparation time with a template in hand.

The template provides example text for the entire plan, giving you a real sense of what the narrative of each section should look and feel like when completed. This gives an entrepreneur a much greater understanding of what to do than a description of the purpose of each section can.

Finally, using a template rather than writing a plan from scratch should mean that you will need much less expertise in accounting. Although an understanding of accounting methods and an ability to read financial statements will be important for you to develop over time as manager of the business, creating pro forma financial statements generally requires much more financial skill than entrepreneurs start with.

How to Use a Template Correctly

All of the text in the template must be adjusted to reflect the specific local, market, and competitive situation your business faces. Even general research which may serve your purposes should be double-checked and updated if necessary. Proofread through the entirety of the plan and be sure to remove comments or tracked changes when finished to be sure there is no reference that you worked from a template. The result should be as professional looking as any business plan created from scratch, if not more so.

The financials must be adjusted as well, starting with startup costs specific to your situation and research, and then including the operating costs and revenue streams you project. Ideally, you will be adjusting a limited number of pages in the financial section, with the effect of these changes populating through all of the pro forma financial statements.

The Financial Statements

No part of the business plan is more important than the financial section. It is here that the plan can fail if the needs of funders are not taken into account. The financials should include the following key information:

Financial Summary

A simple, five year financial summary should show the expected growth in revenues and profit over the years, as well as expenses (yes, expenses do have to rise to allow for increased revenues). This type of summary can go further by showing some non-financial markers of success, such as the number of full-time employees, number of locations, number of products sold in a year, and number of clients. Readers will look to see that the growth described in this summary seems attainable from the market opportunity and size given as well as the strength of the marketing and operations plans and the management’s means to execute them.

Sources and Uses of Funds

Within the financial section there should be details on the funding requirement for the business and who the funders will be. If any funding is secured already, this is certainly information to mention. However, if all funding is still uncertain, this section should at least describe the type of funders that are being targeted. The uses of the funds should then be detailed, showing what the pre-launch startup expenses will be as well as the needs for additional working capital going forward.

Pro Forma Financial Statements

Finally, a full set of pro forma (projected) financial statements should be included in the appendices of the business plan. These financial statements must be completely consistent with the financial summary and sources and uses of funds described earlier. The statements include the income statement (sometimes called the profit and loss statement or P & L), balance sheet, and cash flow statement. Generally, more detail is given for the first three years by showing quarterly results. Additional statements should then show annual results for the first five years.

The income statement shows the revenues and expenses (grouped into appropriate categories), and the profit or loss for each period. The balance sheet shows the breakdown of assets, liabilities and owner’s equity in the business at given points of time. The cash flow statement shows the cash inflows and outflows from normal operations, investment in the business, and financing from lenders and investors. The advice of an accountant or business plan consultant familiar with drafting these statements is recommended to make sure that you get them right.

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About The Author: Eric Powers is associated with Growthink, a business plan consulting firm. Since 1999, Growthink's business plan writers have developed more than 2,000 professional business plans for entrepreneurs and business owners who have raised more than $1 billion in growth capital. Growthink also offers a simple business plan template to help you develop your plan quickly and easily.