Use a Financial Plan Sample

In Your Business Finance Analysis

When you build your business financial plan, use a financial plan sample from a business in your industry to help you set up your own plan and to help you with your business finance analysis.

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Business Finance Analysis

You can use sample financial plans to calculate ratio comparisons (liquidity, profitability, solvency, and efficiency ratios).

You can also use the data from the sample (or samples if you can access other businesses annual reports in your industry) and run the information through small business finance software; then compare to your data.

These comparisons help you conduct business finance analysis and assess whether or not you are tracking, or out-performing, your competitors. If the only comparisons or samples you can access are of different sized companies (much larger or much smaller), use weighted averages to help you compare.

Once you've completed the analysis of your data, complete your own business financial plan. You've now got a reality check in the form of the plan sample that you've analyzed.

To finish writing your business financial plan, ensure that you add assumptions and summary or discussion notes to your plan.

Financial Plan Sample: Summary or Discussion Notes

For instance, if you are a small business owner for a marketing services firm, your summary or discussion notes might look like:

• Sample Summary on Projected Net Income: Our revenue projections for the 5 year plan include increases of 4% per year, with the exception of year 1 where we project an increase of 8%, based on a recent service contract we have signed with XYZ Corporation. It is a one year contract, with an option to renew in year 2 at the same price, plus inflation.

  Our cost of sales is 58% of gross revenues in year 1, falling back to 54% of gross revenues in years 2 to 5. Marketing and Sales expenses, which include advertising, promotions, client entertainment, and travel, are 10% on average of net sales.

  Add comments on all projected large expenses (property, computers, etc.)

  Net income is projected to increase from $32,150 to $41,000 in year 1; from $41,000 to $58,000 in year 2; and so on.

• Sample Summary on Cash Flow Projection: The assumption is that the planned growth in year 1 will require additional cash to hire more staff or contract workers to support the sales growth.

  In this summary statement, explain how you will support your cash needs (bank line of credit, shareholder's loan, prepaid contract, etc.).

  From year 2 on, your cash needs should decline since you now have the additional income from the large sales contract in year 1. Year end cash from years 2 onward should have a positive cash balance in your projections.

• And continue your comments on each section of your plan.

Your Business Financial Plan needs to include:

• Cash flow projections by month; and by year;
• Pro forma Balance Sheet, by year;
• Business Financial Ratios, by year (calculate ratios like liquidity, profitability, efficiency and solvency);
• Pro Forma Income Statement, by year;
• Include a capital expenditures plan if your business has significant capital expenditures in its near-term horizon.

In your financial plan you must include your assumptions.

Some Financial Plan Sample Assumptions are:

• forecast or sales plan;
• cost of goods and/or services;
• inflation;
• impact of foreign currency;
• impact of any major economic factor - e.g. national elections;
• impact of large contract/new business;
• impact of worker shortage;
• impact of property or tax increases or end of lease during period;
• bank interest rates;
• staffing and/or operations impacts (e.g. new hires; employee compensation plans - i.e growth, increases or decreases, new equipment; new software);
• and so much more.

Typically these assumptions are listed at the end of your business financial plan.

When building your own business plan, you must include a realistic financial plan (it's easy to be overly optimistic, especially when starting out). To help you build realism into your plan, your business financial analysis needs to include a review of a financial plan sample (or samples), preferably within your industry.

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