Business plan
Financial Plan- This section includes all of the financial information on the company. This is one of the most crucial sections of the Business Plan and must include the most realistic estimates of current and future financial requirements.
a. Break Even Analysis- A calculation of the approximate sales volume required to just cover costs, below which production would be unprofitable and above which it would be profitable. Break-even analysis focuses on the relationship between fixed cost, variable cost and profit. The break even point is when total revenue (TR) equals total costs (TC).
Break even point ($): Total Fixed Costs + Total Variable Costs = Total Revenue
Total Variable Costs = Variable cost per unit x units sold
Unit contribution (contribution margin) = Price per unit - Variable cost per unit
b. Monthly ProForma Cash Flow Statements over a 3 year period- The Financial Plan must include financial exhibits that describe the financial needs for the business for a minimum of three years. These should be an integral part of the plan and not in the appendix.
c. Monthly ProForma Income Statements over a 3 year period- The Financial Plan must include financial exhibits that describe the financial needs for the business for a minimum of three years. These should be an integral part of the plan and not in the appendix.
Outside of those exhibits, assumptions need to be clearly outlined; assumptions on factors like estimated units sold including type of unit, sales and growth ratio, cost of goods, inventory requirements, bill pay periods, etc. It is important to outline the costs for all of the business actions described in the financial plan because all of this information will be analyzed and included in the potential investor’s decision making proces
a. Break Even Analysis- A calculation of the approximate sales volume required to just cover costs, below which production would be unprofitable and above which it would be profitable. Break-even analysis focuses on the relationship between fixed cost, variable cost and profit. The break even point is when total revenue (TR) equals total costs (TC).
Break even point ($): Total Fixed Costs + Total Variable Costs = Total Revenue
Total Variable Costs = Variable cost per unit x units sold
Unit contribution (contribution margin) = Price per unit - Variable cost per unit
b. Monthly ProForma Cash Flow Statements over a 3 year period- The Financial Plan must include financial exhibits that describe the financial needs for the business for a minimum of three years. These should be an integral part of the plan and not in the appendix.
c. Monthly ProForma Income Statements over a 3 year period- The Financial Plan must include financial exhibits that describe the financial needs for the business for a minimum of three years. These should be an integral part of the plan and not in the appendix.
Outside of those exhibits, assumptions need to be clearly outlined; assumptions on factors like estimated units sold including type of unit, sales and growth ratio, cost of goods, inventory requirements, bill pay periods, etc. It is important to outline the costs for all of the business actions described in the financial plan because all of this information will be analyzed and included in the potential investor’s decision making proces
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