How to Start Your Business Plan Financials
Blog Post (with free checklist to help you start your business plan financials)
Your Business Plan Financials will be used to gauge many things for whether you build a successful business plan – a real roadmap to profits. Most importantly, they will show whether you are on the right track to hitting your income targets going forward.
Many entrepreneurs I work with report feeling apprehension when it’s time to build their business plan financials. It can help the struggling business plan writer to know that these issues are common, and even expected. Developing financials is a big undertaking, especially before your company gets off the ground.
If you’re feeling overwhelmed, know you aren’t alone. I’ve found there are 6 common problems entrepreneurs face when constructing business plan financials. You will have access to the free checklist I have for you in this post to help you get started down the right path for your forecasts.
Before you move forward, consider these common problems:
The Intimidation Factor
First time entrepreneurs tend to have trouble getting started. It’s natural. Business plan financials, require you to move from concept to real numbers. Real numbers can be intimidating and hard to nail down. But the fact is, projections are important because they can be a useful tool for predicting the viability of your company.
Not Knowing Where to Start
Every successful business that ever started (and they all started somewhere) had to do what you’re doing right now – to seemingly pull numbers out of the air. Don’t waste time bemoaning the apparent impossibility of the task. I always tell my clients to start at the beginning, at the most basic level. Tell the story. Play it out in your head, and then get it down on paper.
Confusing Projections with Accounting
If you’re hesitant to commit a number to paper, you may be suffering under the misconception that projections are accounting. It makes sense – accounting uses the same terminology. However, accounting looks backward. In the financial section of your business plan, you’re projecting forward to the future. And it’s actually waaaaayyyyy simpler to do forecasting than other accounting-type financials.
Tending Toward Extremes
Avoid the common tendency to be overly optimistic…or overly pessimistic. Be careful not to over- or under-reach your projections. Put forth your best realistic guess for the future.
When it comes to financial projections, anything you plan will certainly be faulty. However, the point is to have a plan. Conduct research. Use common sense. Use your experience as business owner. Perform an educated guess, and then put a stamp on it. Don’t overthink it. This is about best-guessing it, not creating perfection.
If you need help or are not familiar with these concepts, that’s okay. Just be sure to consult with a professional OR download a good financials template to ease your stress and guide you through the steps.
To start with the basics, consider this checklist. It walks you through a few things to consider as you dive into your business plan financials.