“A man who does not think and plan will find trouble right at his door” Confucius
There is no need to explain this famous quote as a realistic plan shows where do we stand, what we own, what we owe and the footsteps we should follow to progress well in the future. Many a business have faced early demise just because of they had not bothered to plan the course of action to achieve the very objective.
The part of financial aspect in making a business plan viable and successful is very crucial as each and every penny needs to be spent in the most efficient way. If the financial statements are not properly forecasted the business would never prosper but will only have time for financial crises management. Fundamental aspects of financial statements underline its necessity for formulating a successful business plan.
Balance Sheet
This part of financial statement explains the state of any firm at a given point of time. It is categorized in to assets, liabilities and net worth. It shows what you have and what you owe so that how much you need to allocate and from what means for future requirements.
Income Statement or Profit Loss Account
Income statement shows the revenue of an entity over a period of time. Forecasting financial statements would help in judging the expected revenue over the period of expected operations. If the income is found to be less than the requirements additional arrangements like public offer etc. need to be done for the augmentation of extra pennies required.
Cash Flow Statement
Inflows and outflows of cash resulted from the day to day functions of the business like investments, operations and financing activities are specified in this section. It also enumerates the financial requirement of every step of operations and hence the corresponding revenue can be ensured. The endeavor should be to make the inflows surpass the outflows in the long run to ensure better profits.
Statements of Retained Earnings
This type of statement describes the movement of the equity held by the owner of the business and its effects on the overall financial state and operations over a given period. Forecasting this would help in incorporating necessary amendments so as to ensure smooth running of business such as dividend payments, merger or splitting up of equities etc.
Business plan is what you aspire to achieve and how you are going to achieve. You may be able to plan it without forecasting financial statements but to ensure it an attainable and viable solution you need to forecast your financial strengths, weakness and liquidity.
There is no need to explain this famous quote as a realistic plan shows where do we stand, what we own, what we owe and the footsteps we should follow to progress well in the future. Many a business have faced early demise just because of they had not bothered to plan the course of action to achieve the very objective.
The part of financial aspect in making a business plan viable and successful is very crucial as each and every penny needs to be spent in the most efficient way. If the financial statements are not properly forecasted the business would never prosper but will only have time for financial crises management. Fundamental aspects of financial statements underline its necessity for formulating a successful business plan.
Balance Sheet
This part of financial statement explains the state of any firm at a given point of time. It is categorized in to assets, liabilities and net worth. It shows what you have and what you owe so that how much you need to allocate and from what means for future requirements.
Income Statement or Profit Loss Account
Income statement shows the revenue of an entity over a period of time. Forecasting financial statements would help in judging the expected revenue over the period of expected operations. If the income is found to be less than the requirements additional arrangements like public offer etc. need to be done for the augmentation of extra pennies required.
Cash Flow Statement
Inflows and outflows of cash resulted from the day to day functions of the business like investments, operations and financing activities are specified in this section. It also enumerates the financial requirement of every step of operations and hence the corresponding revenue can be ensured. The endeavor should be to make the inflows surpass the outflows in the long run to ensure better profits.
Statements of Retained Earnings
This type of statement describes the movement of the equity held by the owner of the business and its effects on the overall financial state and operations over a given period. Forecasting this would help in incorporating necessary amendments so as to ensure smooth running of business such as dividend payments, merger or splitting up of equities etc.
Business plan is what you aspire to achieve and how you are going to achieve. You may be able to plan it without forecasting financial statements but to ensure it an attainable and viable solution you need to forecast your financial strengths, weakness and liquidity.
