Finance Projections

Finally, your business plan must address the hard reality of financial matters. The financial projections provide outsiders with a way of deciding between various investment opportunities and they provide you with a measuring stick against which to gauge the actual performance of your business against its budgeted targets.

Key Elements

In order to develop profit and loss and cash flow projections, certain assumptions must be made and it is vital that the assumptions made are realistic and that the reader can identify and assess the assumptions easily.
Assumptions can be simple (i.e. Sales up 5% on last audited accounts), or more detailed, but there must be a justification or back-up, as these will be interrogated by the potential investors/funder.
Forward order books, current sales orders, outstanding tenders etc can all be used to determine future projected turnover. Any changes to current margins should be documented and justified. Any changes to staff numbers, or locations should be reflected in the projected overheads.
Seasonality may be important, so if monthly figures are required, then these should reflect the actual operations and cash-flows of the business.
This section should also provide a detailed commentary on what they mean and what the key operating ratios and comparisons show about your business.

Recommendations

This section of the business plan should include only summarised forecasts, and the key assumptions made, with detailed projections and a detailed list of assumptions being included in the appendices to the plan.
The plan will need to address the taxation implications of your proposal i.e. Corporation Tax provisions and repayment dates, VAT quarters etc.

top