How to Write the Financial Overview
The financial overview section of the business plan can cause great anxiety in small business owners—particularly when a company is in the start-up phase, as it’s hard to project sales, estimate expenses, and model future finances. Still, you need to have a firm handle on the money that flows in and out of your business if you expect it to survive over time.
Financial statements—including the income statement, balance sheet, and cash flow statement—each contribute to a full picture of your company’s well-being, which is a subject of critical interest to business plan readers.
Table of Contents
The Income Statement
The income statement tallies all your revenue from product sales, interest, and other income, and then subtracts all of your business expenses over the same time period to reveal your net income, or profit.
The Balance Sheet
The balance sheet presents your company’s worth at a moment in time by illustrating a simple equation: assets – liabilities = net worth. The balance sheet sums up everything that your business owns, such as real estate or equipment, and subtracts your debts to reveal the value of the equity held by the company’s owners.
The Cash Flow Statement
The cash flow statement shows how much money flows into your business—and how much flows out—during a certain timeframe. This document helps you manage time lags between purchasing raw materials, selling goods, and receiving payment.
Typical Financial Overview Content
- Income statement
- Balance sheet
- Cash flow statement
- Financial discussion
What You Need to Get Started
- Tax returns
- Marketing, staffing, and other budgets
- Financial records
- Past sales figures
- Cost projections
- Payroll figures
- Loan documentation
Financial Overview Tips
- Seek help: Your financial statements and projections are too important to develop without the advice of a professional accountant.
- Do your homework: Improve your knowledge of the financial side of your business by attending seminars, reading books, and asking questions until you understand.
- Be conservative: Be sure that all of your financial projections are logically developed from past financial performance or, if your business is new, based on in-depth research about peer companies. Doing so will build credibility with your audience.