Financial and business planning
A convincing business plan with properly constructed financial projections is the foundation of a well managed company. It's essential for raising finance, but it's also very good practice for every business to articulate its business strategy and the means to achieve it.
The financial plan
Expressing your business in numbers is the essential first step in planning. Until your ideas make financial sense, you don't have a feasible plan.
Your financial plan should be detailed. For instance, a small business should list every current and future employee individually with their salaries. Figures should be monthly, so that seasonal effects are revealed. The main revenue drivers should be identified and used to project sales. Expenses should be related to sales and to each other, so that the projections remain valid for increasing activity levels.
Profit and loss, balance sheets and cash flows should be fully integrated so that monthly bank balances are calculated, and the cash effect of different strategies are evident. Working capital (debtors, creditors, stock) should be calculated realistically, as this can have a significant effect on cash requirements.
The end result is your financing requirement or your cash generated - the essential numbers that every stakeholder is interested in.
You should have a long term plan that shows where you will be in five years or so. The first year of the plan will be your detailed budget against which you report performance each month.
The business plan
The level of detail in your plan depends on who it's aimed at.
You will need the plan in the form of an information memorandum if you are raising finance. More about that here.
Companies should regularly undertake a complete review - from a zero base - of all their activities and business methods. This is vital when a business is in trouble, and it is often the first action of new management brought in to sort things out. It makes sense to do the zero-base review long before this stage is reached, to verify the business is on track or to change strategy and tactics as needed.
The end product is your rolling business plan, with the research and reasoning underpinning it.
Getting it done
I have been putting financial projections together for many years and have developed an Excel template that makes it easy for me to capture all the detailed elements required. There are modules for revenues, payroll, overhead costs and working capital, and these can draw data from external sources, such as your own Excel figures. The output is monthly profit and loss, balance sheets, cash flows and key ratios, with annual summaries for the business plan or information document.
I've written many business plans and have had scores presented to me. I know how to assemble a compelling document that has all the right elements in the right order, and expresses the message in clear, concise language. I can help you write your plan from scratch or fine tune what you already have.