Financial Projections & Analysis
The Financial section of your business plan is all about the numbers. Here a list of some suggested items that you should include with your business plan.
- If available, include historical financial statements (balance sheet and income statement) for the last 3 years as well as an analysis outlining strengths and weaknesses or any area(s) of concern.
- Financial projections should consist of the following:
- Opening Balance Sheet (at start of proposed project)
- Balance Sheet (at end of year 1,2,3)
- Cash Flow Statement (for years 1,2 & 3 with the first 12 months being presented on a monthly basis)
- Income Statement (for years 1,2,& 3, with the first 12 months being presented on a monthly basis)
- Financial projections should be accompanied by all assumptions: eg. sales are based on what analysis – historical sales, market analysis, etc.
- Outline any strengths, weaknesses or area(s) of concern with financial projections
- Financial analysis should include:
- Breakeven analysis – how much sales volume is required to cover costs
- Ratio analysis eg.;
- Liquidity: Current ratio=Current Assets/Current Liability
- Leverage: Debt to Equity (%) = Total Debt/Equity
- Profitability: Return on Equity (%) = Net Income/Owner’s Equity Return on Investment (%) = Net Income/Total Assets
- Ratio Analysis should include a comparison against industry norms (Dun & Bradstreet Canada, Performance Plus – ic.gc.ca) and explanation of any significant variances that occur.
Below you will find some tools to help you complete this section.