I am preparing a start-up business proposal, what should I do on the financial section?
I have a new business idea few weeks ago and want to write a start-up business proposal for funding. However, I have no experience on preparing business plan. I found it is difficult for me to prepare the financial section, as this section requires to offer financial statements like balance sheet, cash flow and income statement, etc.
But my question is I don’t have the past financial data and I have no idea how to get it done. What should I do?
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Well, if it is a business plan it should be a projection of where you will be in the future in regards to income, assets and liabilities and cashflow. Since you are just starting you will not have history but should sell your projected statements of income and cashflow based on your projection of sales and expenses and the detail behind each to show how you will make a net profit.
a start up business proposal will usually have a financial section which shows your expectations of profit, cashflow and financial position. Profit is shown on the Income statement, cashflow on cashflow, and financial position on the balance sheet.
Since its a start up, you only have to work with projections and it will be alot less reliable then past performance.
Dont make the statements overly complicated, just show what your estimated inflows/outflows are per month, and what these inflows/outflows are. Break them down and show your assumptions. People who read these alot can tell how realistic the assumptions are, so dont get too creative.
You should try and show about 5 years of projections, and unless the company is profitable and has paid back financing within 3 years, it could well be rejected.
Your financials will be projections of future sales/expenses. Future Sales come directly from the Market section. Your Target Market numbers are where you will begin to estimate your 1st month sales, 2nd month sales, etc. You should make lists of: Fixed & Variable Expenses, Fixed Assets Needed, Miscellaneous Assets Needed. These amounts will then be placed in your Cash Flow spreadsheet. Also, do a Breakeven Analysis to calculate how many sales are needed each day/month or hour. Your local library will have some books in the reference section with examples. Good Luck