he financial study is an important part of the business plan. It is thanks to the financial study that you will be able to analyze the future financial profitability of your project and, therefore, potentially convince a banker or an investor to finance your project.
The business financial plan allows you to have a 360º vision of your future finances . The financial aspects of a business plan will allow you to understand at the same time how your expenses will impact your profitability, what is the volume of income you must generate to be profitable, how long it will take to pay off your loan, etc.
It is perhaps the most difficult part of the business plan to develop.Indeed, the financial plan requires financial knowledge, a lot of math, writing skills and some rigor!
Without financial knowledge, one can easily go wrong when drawing up a financial business plan . Certainly, between taxes, social contributions and tax rates, there are many elements that must be taken into account. You have to juggle financial indicators and complex calculations: it is a difficult exercise for beginners (but not impossible).
In this article, we provide you with 10 tips and tricks to succeed with your financial business plan.. From the period of time that your financial study must cover to the tables that it must contain, going through the formulated hypotheses and the coherence of the plan, we explain the financial aspects of the business plan in detail so that you can be successful in your venture and obtain your funding request. Below you will find a free example of the financial aspects of a business plan.
YOUR FINANCIAL STUDY MUST RESPECT CERTAIN RULES
Your financial analysis should cover 3 years . It is the standard duration of the financial aspects of a business plan: 3 years or rather 36 months, since you must present an Excel financial plan on a monthly basis (this allows you to have a more precise vision of your finances). It can also span 5 years, but this is generally a bit long for proper financial projections.
Your financial study should contain a number of financial tables.No, your financial study is not just an interim balance sheet or an interim budget. It must, in effect, contain these two tables. However, it should also include a provisional income statement and, if possible, a financing plan, a breakdown of intermediary management balances, a break-even analysis, as well as some graphs and financial ratios.
Your financial analysis should be standardized.Financial tables are not drawn up randomly: they must respect a certain nomenclature. For example, your tentative budget should be divided into cash in and cash out. In addition, the cash flows (month by month) and the cash (or treasury) balance must be clearly displayed. All financial tables contain certain presentation rules. It is up to you to respect them.
A financial study is a set of financial tables.In it we generally find the balance of the provisional situation, the treasury budget (or provisional budget), the provisional income statement, the financing plan, the detail of the intermediary management balances, the analysis of the break-even point, the detail working capital requirement calculation, as well as charts and financial ratios!
ASSUMPTIONS: THE HEART OF YOUR FINANCIAL STUDY
You have to have a section dedicated solely to assumptions in your financial analysis . Certainly, a good financial study is one in which you can easily modify the assumptions (the list of expenses, the average basket, the hiring of personnel, etc.) and see how this impacts the main financial indicators (the volume of income , gross margin, net profit, break-even point, etc.).
Do not enter random figures. We know that the exercise of financial forecasting (in which one tries to "forecast your finances") is a difficult exercise to the extent that... we cannot predict the future. This is not a reason to enter figures at random: you should detail your assumptions and explain why you have chosen them.
Always take a conservative approach when considering income or expense assumptions. For expense assumptions, you should always take the "higher" amount to prevent unfortunate surprises. For revenue forecasts, be 10% more conservative (ie 10% down) than usual.
For expense assumptions, you should always take the "higher" amount to prevent unfortunate surprises.
USE A TEMPLATE TO SUCCEED WITH YOUR FINANCIAL ANALYSIS!
Download our sample financial plan for free. In this example, you will see exactly what a financial analysis corresponds to and how to build it. We must note, however, that our free example does not contain formulas: so if you change the assumptions, the financial tables will not update automatically (unlike the rest of our financial plan templates).
Our models contain all the financial tables necessary for a financing request. All the financial elements and tables that we have mentioned above (the provisional balance sheet, the treasury budget, the provisional income statement, the financing plan, the detail of the intermediary management balances, the analysis of the break-even point , the detail of the calculation of the working capital requirement, graphs and financial ratios) are included in our financial analysis. Our financial business plans will then allow you to have a comprehensive vision of the future profitability of your company.
Our business plan models are adapted to each type of project.For example, in the case of a financial plan for a restaurant, we have included all the expenses (initial as well as recurring) that a restaurant can incur. In addition, we have used a method specific to the business model of a restaurant to calculate the volume of revenue. In effect, to calculate the volume of revenue for a restaurant, we are going to think in terms of diners, number of days of service, and the average amount of each bill paid by a customer.
Try different scenarios thanks to the hypotheses. That's the great advantage of our Excel business plan templates: you can easily test different hypotheses and see how they impact profitability and margins in the long run.
Easily check the consistency of your financial plan.We know that our clients are not financial experts and for this reason we wanted to help them easily verify that the hypotheses entered are relevant and coherent. In our financial business plans, you have a tab entirely dedicated to verifying your financial projections. You can entertain yourself by changing the assumptions until the model tells you that your projections are correct. To give you an example, in this tab we make sure that you allocate enough resources to marketing, that your revenue volume increases at a good rate, and that your cash balance is always positive.
All our models include guides, to facilitate their use. In order to minimize the risks of error, we have included in our financial business plans indications and instructions to fill them out correctly. Our mission? That someone who knows absolutely nothing about finance (and who is not an Excel expert) can quickly, easily and correctly prepare a financial plan for your business project.
MAKE SURE YOU UNDERSTAND YOUR FINANCIAL STUDY
You need to be able to explain your financial plan to a banker or investor. Too many entrepreneurs who enlist the services of an accountant to prepare their financial projections (which is nothing wrong, by the way), do not try to understand the main conclusions of these projections. It's a mistake: if your banker or investor asks you questions about your cash balance or your interim budget, you should be able to answer them.
Know how to explain your hypotheses. Obviously, when we build hypotheses in a financial plan, we are never 100% sure of what we enter (who can claim to be able to predict the future with 100% accuracy?). However, one must be able to provide an explanation for the amounts chosen in the assumptions.
Understand the financial results, at least in broad strokes . Why does the volume of income increase in the second year? Why do you wait 6 months before starting to pay yourself a salary? What makes you think that the average shopping cart for your company will be around €50 excluding tax? Why are you asking for 100,000 euros to start your project (and not 200,000 or 50,000 euros)? What are the expenses that will most impact profitability? Where will your break-even point be in 3 years? You have to know how to answer all the questions.
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