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The Financial Plan

The Financial Plan. Result of your Marketing and Operations plan expressed in Pesos and centavos. Financial Plan Outline. I. Executive summary II. Narrative of the list of your Assumptions III. Sources and Uses of Funds (Pre-op) IV. Pro forma financial statements:

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The Financial Plan

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  1. The Financial Plan Result of your Marketing and Operations plan expressed in Pesos and centavos.

  2. Financial Plan Outline I. Executive summary II. Narrative of the list of your Assumptions III. Sources and Uses of Funds (Pre-op) IV. Pro forma financial statements: a. Cash flow statement (pre-op + 2 years) b. Income statement (pre-op + 2 years) c. Balance sheet (pre-op + 2 years) d. Break even analysis e. Sensitivity analysis V. Relevant Ratios and the discussion of their significance VI. Conclusion

  3. Executive Summary • Objective: To provide the reader with a brief familiar tour of your planned business and the exciting projected financial results. : • Content: • Brief business concept • Planned Business objective • Planned amount of capital Investment or/ and source of needed cash -Relevant ratios for the business that will prove the plan is feasible and the amount invested is enough.

  4. Narrative of the list of your Assumptions • Source: • Marketing budget from you marketing plan • -Sales forecast per month • -Cost of goods to be sold • -Gross Profit rate • -Marketing and selling expenses such as: • Advertising and promotional expenses like flyers, press releases and newspaper or magazine ads • Sales commission • Promotional Events -- Endorsements

  5. Narrative of the list of your Assumptions • Source: Approved operations plan budget: • Amount of capital to be invested for start up • Planned fixed costs: • Manpower cost or Salary & benefits for people of the organization needed in the business • Space and Improvement cost (Monthly rent, advances and deposit required , and amount spent for renovation) • Furniture and furnishings needed • Office / IT equipment s • Machineries if in manufacturing • Pre Operating expenses such as: business name reg., barangay clearance, BIR reg., Municipal or City permits.

  6. Narrative of the list of your Assumptions • Source: Operations Plan Variable costs: -Utilities ( light , water and gas) -transportation and travel -Stationery & supplies -Printing -Freight & forwarding -Communication expenses (telephone, cell phone, broadband) -Professional services -Subscription -Representation and Entertainment --Seminars and Training -Sales tax

  7. Sources and Uses of Funds • Describe business funding and usage of funds from initial investments needed during the start up.

  8. Sources and Uses of Funds Start up Sources: Owner/shareholder’s funds or capital investment Php. 100,000.00 Other sources: Angel financing: Php. 50,000.00 long term loan: Php. 0.00 Total funds available: Php. 150,000.00 Uses of Funds: Business registration: Php. 3,500.00 Prepaid rent & deposit 30,000.00 Prepaid Insurance: 1,000.00 construction & renovation: 5,000.00 Furniture & fixtures: 10,000.00 Machinery 20,000.00 IT &Office equipment: 2 5,000.00 total funds used: Php. 94,500.00 Funds available for operation Php. 55,500.00

  9. Cash flow statement • Detail listing of the sources and uses of funds for a particular month or period of operations. • To enable managers or business owners to project the cash/funding requirement of their business..

  10. Example of a Pro Forma Cash Flow Statement

  11. Non Cash Transactions • Purchases of goods and services both for resale or for use that are on credit (i.e. not paid in cash) to be paid after a certain period of time.

  12. Example of Income Statement

  13. Example of Balance Sheet

  14. Example of Balance Sheet

  15. Break even Analysis • The level of net sales amount with the assumed gross margin rate that a business must achieve to be able to cover/equal the amount of monthly or yearly operational expenses

  16. Sensitivity Analysis • Use your excel spread sheet and make sure that you key in the formulas for each part of your pro f0rma income statement or cash flows for your to be able to do different scenario changes and see the effect. • Example of scenarios: • Lower sales but same gross margin • Same sales but lower gross margin • Higher sales but lower gross margin • Increase in particular operational expenses

  17. Relevant Ratios 1. Return of Sales: (ROS) Return On Investment (ROI) Payback period Liquidity

  18. Conclusion Based on your financial results, try to answer the questions below: • Will your cash requirement required by operation each month of the year be enough with the use of the remaining working capital? • Will your business be profitable? • Is your business a worthwhile business ? (use the ratios)

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