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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