The latest presentation from Wisteria Business Plans lets you know exactly what needs to be included in a Financial Business Plan in order to achieve your goals.

1. ELEMENTS OF A FINANCIAL
BUSINESS PLAN – A GUIDE
Profit & loss accounts, balance sheets and cash flow
forecasts

2. WHAT IS A FINANCIAL BUSINESS PLAN?
 When faced with creating their first ever business plan
most people are aware that they will need to include
some financial projections but they are not entirely sure
what the key elements are.
 This presentation will explain what needs to be included
in a financial business plan and why each section is
important.

3. WHAT IS A PROFIT AND LOSS ACCOUNT?
 The Profit and Loss account gives a measure of a
company’s trading performance over a fixed period of
time in terms of income, sales, expenditure and
profitability.
 It is important to determine whether or not the company
will be able to turn a profit and therefore whether it will
be a viable venture.

4. USES OF A P&L ACCOUNT
 1. Gross Profit
 Shows you how much profit you make from selling
each item without considering your overhead costs.
 Allows you to benchmark your gross profit against
industry norms and against your own on-going
performance.
 2. Net profit
 Shows you your company’s total profit after all
operating costs are taken into consideration.

5. USES OF A P&L ACCOUNT
 3. Break Even Point
 Enables the business to calculate the volume of sales it
will need to attain to cover its costs.
 4. Trends
 For any one of your sales, direct cost or overhead
figures, you can monitor the trend over time.
 Monitoring trends in your profit and loss statement is
critical as this allows you to see any issues that are likely
to arise before it is too late.

6. WHAT IS A BALANCE SHEET?
 A financial statement that summarises a company's assets,
liabilities and shareholders' equity at a specific point in
time.
 These three balance sheet segments give investors an idea
as to what the company owns and owes, as well as the
amount invested by the shareholders.
 Shows how the business is being funded and where
investment has been made in assets for the business.

7. ELEMENTS OF A BALANCE SHEET
 Fixed Assets
Anything that is cash or that can be readily
converted to cash such as money owed to you
by debtors, stock etc.
 Current Assets
Anything your company owns that can’t be
converted readily to cash. e.g. vehicles, property,
production equipment etc.

8. ELEMENTS OF A BALANCE SHEET
 Current Liabilities
Anything that you owe that needs to be paid back
within one year. e.g. bank overdraft, VAT, PAYE,
purchase creditors.
 Capital & Reserves
Capital refers to all shareholder investments, whilst
generally reserves are a cumulative record of all
your company’s profits that have not yet been
distributed as a dividend.

9. WHAT IS A CASH FLOW FORECAST?
 A cash flow forecast illustrates your business’ incoming
and outgoing cash, enabling you to assess how much cash
you have at your disposal at any one time.
 The forecast will allow you to identify the amount and
origin of cash coming into your business and the amount
and destination of cash being paid out.
o Incoming cash includes sales and sources of funding
such as bank loans and overdrafts
o Outgoing cash includes things like tax, interest
repayments and supplies

10. USES OF A CASH FLOW FORECAST
 Poor cash flow is the primary cause for the failure of
businesses
o Many people don’t take into account that fact that
although a business may be profitable, if it does not
have enough cash on a day-to-day basis to pay its bills,
creditors etc. then it will struggle to survive
 The sooner you can anticipate a tight cash flow period the
more time you have available to take contingency action
such as asking the bank for an increased overdraft facility
or negotiating payment terms with suppliers

11. W:http://www.wisteriabusinessplans.co.uk
@: businessplans@wisteria.co.uk
T: +44 (0)20 8951 6342
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