Business Plan Financial Projections

Most professional business plans include some form of financial projections, most are produced with three or five year forecasts of the financial statements. Professionally prepared financial projections can convey more trust with investors and provide internal management with better information for decision making. Pro Business Plans has extensive experience working with entrepreneurs and established companies to produce reasonable financial projections that are accurate as possible through the combination of an experienced team and professional research.

The income statement in the business plan financial projections is probably the most traditional financial statement that everyone is familiar with. It communicates the fundamental profit and loss projections of the company in terms of how and when revenue is expected and where expenses will be allocated. This is important because some companies may have unusual revenue forecasts that can be communicated in no other way than in the income statement. For instance, a company that is owned by the same subsidiary firm may have synergies that reduce engineering expenses and suggest a higher than industry average profit margin.

The balance sheet in the business plan financial projections outlines the capital structure of the company. Investors will be interested to review the balance sheet in order to understand the amount of debt the company has and what its fixed assets are currently valued at. This will help to determine if the company is capable of acquiring more debt and better understand its risk level relative to alternative investment options. The balance sheet holds less importance for Startup companies, unless they already have a capital structure or have acquired assets.

The risk analysis section of the business plan financial projections outlines the financial ratios and custom analysis that investors will use to analyze the investment opportunity. The risk analysis includes such additional modeling as a break-even analysis, custom scenario analysis, and a spread of key ratios. For instance, some investment groups may request to know the amount of customers that a company with high overhead must serve in order to break-even on its investment.