A critical component of your business plan is a strategy for managing your company’s operations. A comprehensive financial plan needs to answer the following questions:

  • Strategy
    • Describe how you will fund and grow your company
  • Financial projections
    • Income for 3-5 years
    • Balance sheet
    • Cash flow
    • Breakeven analysis
    • Sensitivity analysis
    • Assumptions – revenue forecast, cost of revenue, margins, expenses
  • Funding
    • Equity
    • Debt
    • Non-traditional – customers, suppliers, partners
  • Risks
    • Describe the risks associated with the implementation of your plans.
    • Market – size, sales cycles, price consumer will pay
    • Competitor’s pricing – predatory pricing
    • Strategic – volatile industry, establishing agreements
    • Operational – managing components, costs, quality
    • Technology – will it work, scalability, time to develop
    • Financial – exchange rates, interest rates
    • Macroeconomic – state of the economy, regulatory laws, government approvals

In summary, a financial plan should describe the process for capturing the value from the delivery of your product/service and is a critical element of your business planning exercise.

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