Back again with us discussing articles about finances in everyday life. Financial planning or financial planning is an important aspect of developing a business. Especially for those of you who are just starting to build a business.
If you have a clear and regular financial plan, you can avoid losses and reduce the risks of experiencing enormous losses.
Not only that, a financial plan can also be a focus for investors who might be eyeing your business. So when you have a detailed and clear financial plan, it’s no wonder that it can help you to get additional capital to develop the business you are running.
Maybe you are curious about what financial plans should be in or when you are running a business. Here are some components and a little explanation that will make it easier for you to make your business financial planning.
Business Financial Plan
- Sales Projections
Create a spreadsheet or database to project sales of your business over the next few years. Create several different columns on the sales form for each month in the first year. So you can be wrong for the following years. So you can do one of them quarterly.
What are the items in the projection spreadsheet when running sales projections? The projection is easy, you just give 5 columns which are said to be:
- Potential units sales
- Price units
- Potential sales revenue = Total sales units x price
- Cost units
- Cost of goods sold = Number of units sold x cost units
By calculating things like the one above, you can estimate gross profit, which is the total potential sales revenue subtracted from the cost of goods sold.
- Create an Expenditure Budget
Want to have something like a successful or successful financial plan? You also need to make various estimates of how much it will cost to generate a sale. So you can divide it between fixed costs and variable costs.
Fixed costs are expenses that are incurred constantly such as rent, employee salaries and other expenses in your business. Meanwhile, variable costs are unpredictable expenses such as costs for advertising and promotion.
So the technique or method can also be divided into between setup costs and operational costs. Setup fees are costs that you need upfront to build a business such as registration and business licensing fees, property and other costs. Meanwhile operational costs, which include all the things needed to keep your business running and running, such as logistics costs, internet costs and promotional costs and so on.
- Income Report
Making a statement of income, expenses and profits in the business that you are running for a certain period is very important and very good. Moreover, you are owners or investors who are interested in business to find out whether your business is profitable or has suffered losses so far.
If you have a financial statement then you can calculate all net profits by subtracting gross profit from interest and taxes. If the company makes a quarterly income report, those of you who are just starting to do business should make a monthly income report for 1 full year.
- Cash Flow Estimates
In this report, you can see the flow of cash in and out of the business or business that you are running. Cash is very important to ensure a business or business can keep going and will not be short of funds. So all basic cash flow forecasts can determine cash from inputs as well as expenses.
To make a cash flow forecast report, you can do it in a matter of per year so that you don’t have too much. So this is very important in various invoice payment processes which are paid in cash within a period of 30-60 days and so on you will not be confused in managing business finances.
- Balance Sheet
The balance sheet is basically a statement of wealth or assets in a business. If viewed from the balance sheet, entrepreneurs and investors can assess the financial health of their business. Estimates from the balance sheet can be seen from:
- Assets: financial value owned by a company such as property, cash, online selling web, and so on.
- Liabilities: Payable to creditors of the company.
- Equity: The difference between assets and liabilities.
- Break Even Point Analysis
In the main component of the financial plan is a Break Even Point Analysis. Break Even Point Analysis or what is often referred to as BEP is a point where expenses can be with the level of sales. If your business or business is worthy of the total business income at a certain time and can exceed the total expenses. This section is important for entrepreneurs to assess whether a business can grow and be profitable and even harm entrepreneurs.
Judging from the financial plan, you can compare the performance of the business in a certain period. That way you can determine a step or the right action to organize your business.
This can affect especially those of you who are in the marketplace section, now there is an easier online business way that allows you to manage inventory, orders to access transaction reports. Making business financial reports can be easier and more practical so that you can focus more on running your business on a successful path.
So as explained earlier. You must have several things or demands for a process to run well so that it can achieve an extraordinary advantage. Thank you and hope it is useful.