What should a financial section of a business plan include?

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No matter how good your business idea is and how much money you manage to invest in it, the foundation of a business is its financial stability. Especially in the business plan, you need to show that in the foreseeable future your startup will take off and become profitable. How to write the financial section of a business plan? Read our article to find out.

Financial section of a business plan – table of contents:
What is a financial section?
Set goals
The income statement
The balance sheet
Cash flows
Break-even point (BEP)
Benefits of a Financial Plan
What is a financial section?
What exactly is the financial section in a business plan? In the austria whatsapp number database section, you should focus on forecasting the financial situation of the startup, as this is mainly necessary for attracting investors or obtaining a loan. By creating such a section, you can better understand how your company works and learn about the prospects of how the company can run in the future.

Set goals
It is a good idea to start building a financial plan by setting goals for the company. Goals can be divided into short-term, medium-term and long-term. The former are usually set for no longer than 5 years. Here we can outline, for example, the repayment of debts and loans, but also the purchase of new assets or an increase in market presence. Medium-term plans are usually implemented over 5 to 10 years, and these are larger investments. Anything we want to achieve in more than 10 years is referred to as long-term goals – difficult, often costly, but important for the development of the company.

The income statement
Next, it’s worth including an income statement in your financial plan. This will give the reader of your business plan an overview of your expenses, revenues, and profits for a given period. It will also allow you to assess your most important financial results and get an idea of ​​what your startup’s current status is – whether it’s making a profit or a loss.

The balance sheet
In a financial plan, it is also important to include a balance sheet that shows how much equity the company has at a given time. This is a kind of summary of the financial situation. On the one hand, you need to determine the company's assets, that is, everything the startup owns. On the other hand, you have liabilities, that is, debts owed to the company's creditors. By knowing the exact value of assets and liabilities, you can determine the amount of equity. You simply need to subtract liabilities from assets.

financial section
Cash flows
Another element that should be included in the financial section of the business plan is the cash flow projection. This shows how money is expected to flow into and out of the company. This way, you can easily determine when expenses are becoming too high and when you should consider external financing. Thanks to the cash flow projection, potential investors who read the business plan can tell whether the company has enough cash and whether it is worth investing in.

Break-even point (BEP)
On a financial level, it is also worth defining the break-even point. What is it? The break-even point is the point at which total costs and total revenue are equal, meaning that there is no loss or gain for your business. If your company breaks through a break-even point, it means that it has started to make a profit. Determining the break-even point is useful when analyzing sales figures, analyzing costs, and setting prices. Thanks to a break-even point analysis, you can think about what you can do to increase profitability and reduce the time it takes to reach that limit.

Benefits of a Financial Plan
What are the benefits of a financial plan? With such an analysis, you can clearly define the company's goals. A financial plan will allow you to manage your cash flow more sensibly, allowing you to better allocate your company's budget. Such a plan also helps you identify and reduce costs. This, in turn, minimizes financial risks. Above all, however, a financial plan increases the chances of raising funds.