Business Plans -Part 2

by Brian Moore, CGA

In the narrative portion of your business plan you have provided the reader with a snapshot of your business so they can properly evaluate your financial projections and requests. You should consider enlisting the services of a professional accountant to help you prepare these projections to ensure that they are prepared using current Generally Accepted Accounting Principles, and provide all the information necessary for the reader to make an informed investment decision.

If the purpose of your business plan is to obtain financing you should include information on your specific financing request; that is, what the funds are needed for and how these funds are to be obtained. If your business is an existing operation, you should also include the last two years of year end financial statements which will give the reader an idea of the financial viability of your business.

All business plans include financial projections which can be for as far into the future as five years, although one to three years is most commonly requested. The intended audience will generally indicate what kind of projections they require. In a very basic situation a one year projected statement of cash flow (receipts from all sources less all payments expected) will suffice. In more complex situations full financial pro forma financial statements are required and include a balance sheet, statement of income, statement of cash flow, sensitivity analysis and detailed notes indicating the assumptions used to prepare the financial statements.

As appendices you may want to include your resume, quotes for items to purchased, promotional materials and any other useful information that does not fit into the body of the plan.

When the business plan is complete an executive summary is used to provide an overview of the business.

It is important to remember that a business plan is a living document and should be reviewed and updated from time to time. It is a useful management tool that you can use to compare future results with the original idea to ensure that you are progressing towards your business goals.

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