FINANCIAL PLAN

Financial Plan

 Is the business idea viable or

profitable?
 Will your business plan be able to
attract any investments?
 Financial Plan

TYPICALLY, this consists of 3 financial

statements.
1. Income Statement
2. Statement of Cash Flow
3. Balance Sheet
 Income Statement

A financial statement that indicates

how the revenue is transformed into
the net income. It is also referred to
as Profit and Loss Statement.
 Projected Income
Statement

You need to forecast your

estimated sales for a period of time
(month, semi-annual, annual).
You can forecast how many
customers will buy your product.
 Income Statement

Revenue Net Income

money from the profit after all
sale of products expenses are
and services deducted
 Income Statement

COGS (COST OF GOODS SOLD)/

COST OF SERVICE
direct costs attributable to the
production of goods which includes
material cost and direct labor cost
 Income Statement

GROSS PROFIT
It is the difference between
revenue or income and the cost of
making a product or providing a
service.
 Income Statement

OPEX (OPERATING EXPENSES)

It is an ongoing cost for
running a product, business, or
system.
Capital Expenditure (CAPEX)
It is the cost of developing or
providing non-consumable parts
for the product or system. They are
not included in the income
statement.
Income Statement: Example
Bench T Shirt
Projected Income Statement
December 2010
Sales $ 100,000.00
Less: Cost of Goods Sold 25,000.00
GROSS PROFIT 75,000.00

Less: Operating Expenses

Rent 12,000.00
Salary of Employees 10,000.00
Transportation Expenses 3,000.00
Advertising expenses 5,000.00
Office supplies 2,000.00
Website development 3,000.00
Total Operating Expenses $ 35,000.00

Net Income $ 40,000.00

Financial Requirements

1. Fixed capital
2. Working capital
3. Pre-operating capital
Financial Requirements

Fixed Capital
These are usually one-time
expenses, and will generally last
the lifetime of the business.
Financial Requirements

Fixed capital (Examples)

• cost of land and building
• lease deposits on them
• cost of improving the land or renovating the
building
• furniture, furnishings and fixtures
• machinery and equipment
Financial Requirements

Working Capital
This is the reserve money you need
to run the business until it becomes
self-supporting, which may take
from one to six months or even
longer.
Financial Requirements

Working Capital
• to purchase raw materials
• compensate workers
• pay for transportation, telephone,
electricity and water bills
Financial Requirements

Pre-operating Capital
This is money that you spend
before your business begins to
operate.
Financial Requirements

Pre-operating Capital
• register the business
• acquire licenses for franchises
• pay a consultant or lawyer