Financial Forecasting for Your Business Plan
Writing a business plan is hard enough, but there is one section that many find toughest of all. The financials. How are you supposed to predict what you’re going to earn in your first year of business? What outgoings should you include? Do you need a crystal ball? Financial forecasting for a business plan is hard work, but we’re about to make it just that little bit easier.
What is financial forecasting and why is it important?
Before we delve into the ins and outs of writing your business plan’s financial section, let’s take a look at what financial forecasting actually means. No one is expecting you to get this part of your plan spot on before you’ve even started your business. Not unless you’re Mystic Meg, of course. However, this is going to give you (and potential investors) an idea of what you can make and what you may need to pay out for. A clear financial plan will help you secure loans or grants, as well as giving you a projection to work with in the future. As your business grows, you will constantly look back and update your financial section, so it’s imperative you have a strong foundation to start with.
Writing your business plan’s finance section
It’s important to remember that there’s no right or wrong order to fill these details in. You might find that you have more information about one section than you do another. Writing everything in rough notes and then filling in the tables will give you more time to clarify information. It’s also important to remember that you need to be realistic when creating a business financial plan. It’s far better to underestimate than overestimate. With that being said, let’s move onto the individual components of your financial forecast.
Financial forecasting for your business plan – Next up: Working out margins, profit and your sales forecast