Learn2 Write a Business Plan - Step 9

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                          Learn2 Write a Business Plan
      
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                          (Continued) 
      
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                                    Prepare a financial
      
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                          plan 
      
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                          Unless you're an accountant, the financial plan
      
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                          is probably going to be the most difficult part of
      
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                          the overall business plan. It must include detailed
      
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                          spreadsheets, as well as text that summarizes
      
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                          and explains the numbers (for example, any
      
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                          assumptions you make about business
      
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                          projections). You should definitely consider
      
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                          seeking help from a professional accountant or
      
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                          business consultant when preparing your financial
      
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                          plan. 
      
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                          Don't overestimate income or underestimate
      
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                          costs, and be ready to provide verbal
      
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                          explanations for every number, even if you
      
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                          received help from a third party. Finally, develop
      
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                          an accounting system to ensure accurate financial
      
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                          reporting to both you and the lender. Required
      
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                          elements include: 
      
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                               Past income statements (which include
      
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                               both income and expenses) and balance
      
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                               sheets (total assets vs. total liabilities) if
      
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                               you're already in business 
      
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                               Projected income and balance sheets for
      
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                               each month of the first year, then quarterly
      
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                               and annually for years two and three 
      
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                               Projected cash flow statements for each
      
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                               month of the first year, then quarterly and
      
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                               annually for years two and three (your
      
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                               investors want to be sure you have the
      
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                               cash to meet payroll and other expenses) 
      
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                          If possible, make three versions of each of these
      
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                          plans: best-case, expected-case, and worst-case
      
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                          scenarios. It's also important to show what these
      
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                          numbers mean for the investor, so provide
      
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                          analysis that explains the following: 
      
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                               Gross and operating margins: What
      
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                               total profits or losses can investors expect
      
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                               (gross margin)? What percentage of total
      
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                               revenues ends up as profit? 
      
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                               Break-even date: When will income
      
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                               meet expenses? 
      
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                               Return on investment: When can
      
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                               investors expect to get their money back?
      
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                               How much profit will they make? 
      
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                                              Step 10 
      
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