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Financial forecasts
As part of your plan you will need to provide a set of financial projections
which translate what you've said about your business into numbers.
You will need to look carefully at:
- How much capital you need if you are seeking external funding the security you can offer lenders
- How you plan to repay any borrowings
- Sources of revenue and income
Financial planning
Your forecasts should run for the next three (or even five) years and their
level of sophistication should reflect the sophistication of your business.
However, the first 12 months' forecasts should have the most detail
associated with them.
Include the assumptions behind your projection with your figures, both in
terms of costs and revenues so investors can clearly see the thinking
behind the numbers.
What your forecasts should include
Cash flow statements - your cash balance and monthly cashflow
patterns for at least the first 12 to 18 months. The aim is to show that your
business will have enough working capital to survive so make sure you
have considered the key factors such as the timing of sales and salaries.
Profit and loss forecast - a statement of the trading position of the
business: the level of profit you expect to make, given your projected sales
and the costs of providing goods and services and your overheads.
Sales forecast - the amount of money you expect to raise from sales.
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