Financial Plan

Who needs this information?

For anyone who is new to finance and who needs a little introduction into the topic.

How to use this learning nugget?

To just get a basic understanding of the topic read through the giving information. It will give you an idea of what a financial plan is, why it is important, which components are needed and some templates you can use. 

How long does the learning nugget take?

This learning nugget will take you approximatly 5-10 minutes to read. After you can go through additional material that might be helpful.

General Information

What is a financial plan?

A financial plan is an overview of your current business financials and projections for growth. Think of any documents that represent your current monetary situation as a snapshot of a heath of your business and the projections being your future expectations.

Important components of a financial plan are:

1. Profit and loss statement
2. Cash flow statement
3. Balance sheet
4. Sales forecast
5. Personnel plan
6. Business ratios and break-even analysis

Why is a financial plan important?

• A financial plan is a snapshot of the current state of your business. The projections, inform your short and long-term financial goals and gives you a starting point for developing a strategy.
• It helps you, as a business owner, sets realistic expectations regarding the success of your business. You’re less likely to be surprised by your current financial state and more prepared to manage a crisis or incredible growth, simply because you know your financials inside and out.
• Aside from helping you better manage your business; a thorough financial plan also makes you more attractive to investors. It makes you less of a risk and shows that you have a firm plan and track record in place to grow your business.