Question

In reference to small business and entrepreneurship: Please respond to the following prompt with a typed 500 word response. The Financial Plan

Answer 1

Financial plan is very crucial for any business. The financial plan or budget of the organisation helps guide the day-to-day decision making of the business. Every person is cost to company and needs a budget according to the skillsets.

Basically, the financial plan section consists of three financial statements, the income statement, the cash flow projection and the balance sheet.

Business expenses include: Operating expenses and start up expenses.

Operating expenses include Salaries, Tele communications, Utilities, Raw materials, Storage, distribution, Promotion, Loan Payments, etc.

Start up expenses include Registration fees, licensing and permits, Starting inventory, Rent deposits, Set up fees, etc.

Income Statement:

Income statement is very crucail in the financial plan.

The Income Statement gives in revenues, expenses, and profit for a particular period. It's a snapshot of business that shows whether or not the business is profitable at that point in time;

Revenue - Expenses = Profit/Loss.

The Cash Flow Projection

The Cash Flow Projection shows the flow of cash in the business.This gives in the surplus and losses of the business. As part of business plan, a Cash Flow Projection will provide with a much better idea of how much capital investment the business idea needs.

The Balance Sheet

The Balance Sheet is the last of the financial statements that needs to include in the Financial Plan section of the business plan. The Balance Sheet presents a picture of the business' net worth at a particular point in time. It summarizes all the financial data about the business, breaking that data into three different categories; assets, liabilities, and equity.