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Writing a Business Plan - Financials

Balace Sheet

Comparatives - Used for Benchmarking

One of the best strategies for locating comparative sources of information for an industry or a product is to contact the Trade Association that monitors issues governing a particular industry. On the web, their home pages cover news, legislative concerns, and, most productively, data, analysis, and trends for their industry.

To Find Trade Associations, consult:

Conducting Marketing Research - Trade Associations 

  • Talk to competitors, even those in another area.
  • Ask your banker or accountant.
  • Chamber of Commerce
  • Local Business Schools


You should produce:

  • Three Year Summary
  • Detail by month for first year
  • Detail by quarter for second and third years
  • Notes of Explanation
    1. Some explanations can produce:
    2. best case scenarios
    3. worst case scenarios
    4. most likely scenarios.
  • Profit and loss statements.
  • Complement the balance sheet
  • Provides a moving picture over a period of time.
  • Again, use publications such as RMA or trade associations for comparisons.

You should produce:

  • Detail by month for first year
  • Detail by quarter for second and third years.
  • Notes of Explanation
    1. Shows how much cash your business will need.
    2. Details whether to seek equity, debt, operating profits, or sale of fixed assets.
    3. Shows where the cash will come from.

Break Even Analysis

  • Provides a sales objective at which your business will break even.
  • Sales=Fixed Costs + Variable Costs
    •    OR
  •  Sales=Fixed Costs / Gross Margin (profit on sales)

Deviation Analysis

  • Looks at the various parts of the business.
  • Are some parts doing better than others?
  • Are you deviating more from projections than expected in certain areas.

Historical Reports (for existing business)

  • Balance sheets for past three years
  • Income statements for past three years.
    For public companies, check: Company Financial Statements
  • Tax returns