When you're looking to start a business, the importance of putting together a business plan cannot be overstated. It helps you sort out the nitty gritty details about how your business will operate, what your goals are, and how you will achieve them.
Putting together a business plan can be an intimidating endeavor, and for many aspiring business owners, the financial section is the most difficult part. However, it’s among the most important parts to get right. Finances are what will ultimately attract investors and lenders, and the more professionally this part of the plan is presented, the better your chances of growing your business to the next level.
Jana Benton, Nevada State Bank’s Senior Vice President and State Portfolio Small Business Manager, said, “A business plan is like creating a roadmap to success. It gives the business owner direction. How do I get from Point A to Point B? The business plan helps shape how a business gets there, as well as providing milestones and timelines to ensure the business is on target for success.”
The financial section is a critical part of any business plan, but what if this isn't your area of expertise? How should you approach it?
Utilize a business plan template
A standardized business plan template can help you by providing a tried-and-true format. The Small Business Administration (SBA) and SCORE, a non-profit partner of SBA, are great places to start, with templates for both start-up and established businesses. Benton also recommended the Small Business Development Center at the University of Nevada as a local resource right here in Nevada. There's no reason to build your plan from scratch when a readymade framework can get you started on the right track and make the whole process much less cumbersome.
Use the web
Don't underestimate the value of online tutorials and commentary. Search the web for articles about business plans and financial projections. Set aside some time to watch a few YouTube videos about business plans. Set up a playlist, view it from the comfort of your sofa, and take notes.
Make sure to include all key components
The financial section of your business plan should contain financial statements and projections on revenue and expenses, assets and liabilities, and cash flow. In addition to financial statements, prospective lenders or investors will also want to see a sales forecast and, if your business will have employees, a personnel plan.1
Benton explained that projections are important for businesses, especially new ones or a business launching a new product line or store. “Remember to keep projections reasonable and achievable,” she cautioned.
Spreadsheets will prove extremely helpful when putting together the financial section, so become familiar with them if you're not already. Google Sheets gives you a free, easy-to-use option, but plenty of other spreadsheet programs are available. Find some online tutorials if you're starting from scratch, so you can quickly learn the basics. If you have questions about certain functionality, there are plenty of articles and videos that demonstrate every aspect. Once you get comfortable with using spreadsheets, the financial part of your business plan will be much easier to design.
Consult with an accountant
It's strongly advised that you consult with an accountant or other financial professional when setting up the financial portion of your business plan. This is especially the case if finance is not your strong suit. You can gain peace of mind from knowing that you have the input from someone who truly understands the ins and outs of finance, and your business plan will be all the stronger for it. When it's time to present your plan to investors or anyone else, this will help you ensure that this critical portion is in the best shape possible.
After you’ve created a business plan that summarizes what you expect to accomplish in the next few years, consult it often to make sure you’re on track to achieving your goals. Make adjustments as needed–to align your plan with what’s currently happening, and to align your company’s procedures to get you closer to your goals.
“The businesses that I have seen weather the first three years, when so many other businesses fail, are those that have put together a great business plan and have used it effectively to grow their business and stay on track,” concluded Benton.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A. Member FDIC