The Financial Plan
"Money is to my social existence what health is to my body."
― Mason Cooley
One thing we all have to come to terms with is that no matter how great a business idea might be, a business lives and dies based on its financial feasibility and most importantly its profitability. Regardless of how hard you work, how much of your own time and money you’ve put in, at the end of the day people want to support something that has the ability to return their investments and then some.
So what exactly do you have to include in this section? You’ll need to include three statements:
Sounds exciting right? We’ll let’s get started then and break each of those down into digestible components. Hopefully by the end of it, you’ll have something to chew on.
This beautiful composition of numbers is what tells someone reading it exactly what your sources of revenue are and which expenses you spent your money on to arrive at, you guessed it, the bottom line. Essentially, for a given time period, the income statement states the profit or loss (revenue-expenses) that you made.
- Income Statement Template
|Direct Cost of Sales||___________|
|Other Production Expenses||___________|
|Total Cost of Sales||___________|
|Gross Margin %||___________|
|Marketing & Other Expenses||___________|
|Total Operating Expenses||___________|
|Profit Before Interest & Taxes||___________|
The key word here is “balance,” but you’re probably wondering what exactly needs to be weighed? On one side you should list all your assets (what you own) and on the other side, all your liabilities (what you owe), thereby giving a snapshot of your net worth (assets - liabilities = equity).
Balance Sheet Template
|Other Current Assets||___________|
|Total Current Assets||___________|
|Total Long-term Assets||___________|
|Liabilities and Capital||___________|
|Other Current Liabilities||___________|
|Subtotal Current Liabilities||___________|
|Total Liabilities and Capital||___________|
Cash Flow Statement
This statement is similar to your income statement with one important difference, it takes into account just when revenues are actually collected and when expenses are paid. When the cash you have coming in (collected revenue) is greater than the cash you have going out (disbursements), your cash flow is said to be positive. And when the opposite scenario is true, your cash flow is, well negative. Ideally, your cash flow statement will allow you to recognize where cash is low, when you might have a surplus, and how to be on top of your game when operating in an uncertain environment.
- Cash Flow Statement Template
|Cash from Operations||___________|
|Subtotal Cash from Operations||___________|
|Additional Cash Received||___________|
|Sales Tax, VAT, HST/GST Received||___________|
|New Current Borrowing||___________|
|New Other Liabilities (interest-free)||___________|
|New Long-term Liabilities||___________|
|Sales of Other Current Assets||___________|
|Sales of Long-term Assets||___________|
|New Investment Received||___________|
|Subtotal Cash Received||___________|
|Expenditures from Operations||___________|
|Subtotal Spent on Operations||___________|
|Additional Cash Spent||___________|
|Sales Tax, VAT, HST/GST Paid Out||___________|
|Principal Repayment of Current Borrowing||___________|
|Other Liabilities Principal Repayment||___________|
|Long-term Liabilities Principal Repayment||___________|
|Purchase Other Current Assets||___________|
|Purchase Long-term Assets||___________|
|Subtotal Cash Spent||___________|
|Net Cash Flow||___________|
Writing a business plan for your online store is no easy task but I hope after going through the guide you can see that it's well worth the effort. Not only does it better prepare you to deal with some of the shortfalls any new business owner will experience but it gives you a leg up on your competition through better research and insights gained from the process. If you have any feedback or would like to share your success story about how this guide helped you write a better business plan, please be sure to send me an email at email@example.com.