What Are The Four Types Of Business Plan – Writing a small business plan takes time and effort…especially when you have to crunch the numbers for the financial part. But working on the financial side of a business plan can pay off big for your business.
Read on to learn about the financial section of a business plan, why it’s important, and how to write one for your business.
What Are The Four Types Of Business Plan
Generally, the financial section is one of the last sections of the business plan. Describe the company’s past financial condition (if applicable) and future financial projections. Companies include supporting documents such as budgets and financial statements and funding requests in this section of the plan.
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The financial section of the business plan presents the numbers. Followed by executive summary, company description, market analysis, organizational structure, product information and marketing and sales strategy.
Companies trying to get financing from lenders or investors use the finance department to make their case. This section also acts as a financial plan so you can plan the future income and expenses of your business.
The financial part of the business plan is essential to move beyond wishful thinking and into the world of reliable data and beautiful numbers.
Sounds pretty good, right? But according to one study, only 35% of business owners surveyed completed a business plan. Here’s why this can be a problem for business growth and funding:
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Your chances of getting a business loan, consider putting some time and effort into the financial side of your business plan.
To write the financial section, you need to gather some information first. Please note that the information you collect depends on whether you have historical financial data or a new business.
Whether you’ve been in business for a day or 10 years, you have costs. These costs can be simple start-up costs for new businesses or fixed and variable costs for veteran businesses.
Here are some common business expenses you may need to include in the financial section of your business plan:
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Write down each type of expense and the amount you currently have, as well as the expenses you expect to incur. Use a consistent time period (eg monthly costs).
If you run an existing business, you can look at previous monthly revenue to make an informed estimate. Consider factors such as seasonality and economic fluctuations when basing projections on past cash flows.
Making financial projections can be a little more difficult if you are a beginner. After all, you have nothing to fall back on. Set reasonable monthly goals based on things like your industry, competitors and market. Tip: See the market analysis section of the business plan for guidance.
Financial statements detail your company’s finances. The three main types of financial statements are the income statement, the statement of cash flows, and the balance sheet.
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An income statement summarizes your company’s income and expenses over a specific period of time (eg a month). This document shows whether your business had a net profit or loss during that time period.
A cash flow statement breaks down the cash in and out of your business. This document details whether your business has enough cash to cover expenses.
A balance sheet summarizes your company’s assets, liabilities and equity. The balance sheet helps with debt management and business growth decisions.
If you’re running a startup, you can create a “pro forma financial statement,” which is a statement based on projections.
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If you’ve been in business for a while, you should have financial statements in your records. You can include this in your business plan. And include a projected financial statement.
You just got lucky. To learn more about the different types of financial statements for your business, check out our FREE guide Use financial statements to assess the health of your business.
Potential investors want to know when your business will break even. The break-even point is when your company’s sales equal its costs.
Estimate when your business will break even and describe this in detail in the financial section of the business plan.
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If you are looking for funding, please detail your funding request here. Include the amount you are looking for, your ideal terms (eg 10 year loan or 15% equity) and the period your request will be covered.
Don’t forget to discuss why you are asking for the money and what you plan to use the money for (eg equipment).
Finally, your finance department should also discuss your company’s exit strategy. An exit strategy is a plan that describes what you will do if you have to sell or close your business, retire, etc.
Investors and lenders want to know how their investment or loan is protected if your business fails. An exit strategy does just that. It explains how your business will meet the requirements even if it fails.
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When working on the financial side of a business plan, take advantage of your accounting records to make things easier on yourself. For organized books, try Patriot’s online accounting software. Get your free trial now!
Get started with free payroll setup and enjoy free expert support. Try our payroll software with a free, no-obligation 30-day trial. The starting point for any successful company is a properly designed business plan. Without a business plan, a business is like a wandering body without a head. A successful business plan will take into account all business matters and plan accordingly.
1) Executive Summary: A brief description of the entire business plan, about a page or half in length.
2) Company Description: This includes the details of the company, the nature of its business, a brief description of the industry and the type of products to be supplied.
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3) Market Analysis: This section has a detailed description of the market, its needs, potential growth in the near future along with other players in the existing market.
4) Organization and Management: Includes a summary of management and key departments needed to operate the business. It also briefly describes future workforce requirements and expansion strategies. A vision and mission statement can also be included in the case of a new organization.
5) Marketing and Sales: This is a very important part of the business plan that will attract investors. The sales section should cover the return on investment over a period of time, and the marketing section should include cost estimates for marketing. strategies for a strong business start-up.
6) Funding Requirement: Some projects like online business require little finance while others require huge investment. This section covers the same subject as the overall funding request.
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7) Appendices and Glossary: In this section there is a final section containing references for the data along with any research reports.
Types of business plans are classified according to their requirements for different businesses. Here are some types of business plans
As the name suggests, internal business plans are intended for internal stakeholders within the company. This type of business plan helps evaluate specific projects and keeps the team informed about the current state of the business. The company has more chances to succeed, everyone in the team is fully involved and therefore the internal business plan has decided to target stakeholders within the organization instead of external stakeholders.
Is the company growing or failing? Do work patterns need to be changed, improved or adjusted? These are the questions that an internal business plan answers. The main purpose of an internal business plan is not to show the balance sheet of the company’s financial position to external stakeholders, but to run the business as smoothly as possible. It contains strategies and ways to improve the company’s current operations and suggest new growth patterns.
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The strategic business plan is embedded in the internal business plan, which means it is part of it. The main purpose of a strategic business plan is to outline the way forward and answer questions such as What are you going to achieve and How do you plan to achieve it. This answer is nothing more than the strategy the team needs to implement to achieve the goal, which includes strengths, weaknesses and opportunities.
The plan has more comprehensive financial and performance data that is important to investors. Internal efficiency is achieved through strategic business plans so that the team achieves the best results. A strategic business plan also contains a business vision, mission statement, strategy to achieve goals, success factors and an implementation plan.
It is also called an annual business plan, and the name suggests that it is a plan for annual purposes. This type of business plan is more important than a standard business plan for startups. The reason for their reduction is that they only have a year’s worth of information.
They do not intend to explain to investors a 5-year profit plan, but it contains a strategic plan for the next 365 days. yearly
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