If you have a clear business financial plan, you can avoid losses and anticipate the risks that might occur. In addition, the financial plan is also the focus of investors who may glance at your business. Having a detailed financial plan can help you get additional capital to develop your business. You can also hire the bookkeeper eastern suburbs to record your financial data accurately.
What things must exist in your business’s financial plan? Here are some components and their explanations to make it easier for you to make financial planning for business:
Create a spreadsheet that projects your business sales for the next 3 years. Create a different column for sales each month for the first year. For the years that follow, you can separate it quarterly.
Create a budget
For your financial plan to be right, you also need to make an estimate of how much it will cost to generate sales. You can divide it between fixed costs and variable costs. Fixed costs are costs incurred constantly such as rent, employee salaries, and so on. While variable costs are erratic expenses such as costs for advertising and promotion.
The income statement shows your business income, expenses, and profits for a certain period. This is important both for you as a business owner and investors who are interested in your business to find out whether your business is profitable or not.
Estimated Cash Flow
This report shows the flow of cash in and out of your business. Cash is very important to ensure the business can continue to run and not lack funds. The contents of the basic cash flow estimates include cash income and cash disbursements. Remember, only record cash income and expenses.
The balance sheet is basically a report of your business wealth. From the balance sheet, entrepreneurs and investors can assess the financial health of a business.
Break-Even Point Analysis
The main component that must also be present in your business financial plan is break-even point analysis. Break-even point or commonly referred to as BEP is a point where when business expenses equal sales levels. If your business is feasible, your total business income at a certain time will exceed total expenses. This section is important for investors to assess whether a business is growing and profitable or not.