Business Plan 101 - The Financial Section

By Eric Powers Icon

No part of the business plan is more important than the financial section. It is here that the plan can fail if the needs of funders are not taken into account. The financials should include the following key information:

Financial Summary

A simple, five year financial summary should show the expected growth in revenues and profit over the years, as well as expenses (yes, expenses do have to rise to allow for increased revenues). This type of summary can go further by showing some non-financial markers of success, such as the number of full-time employees, number of locations, number of products sold in a year, and number of clients. Readers will look to see that the growth described in this summary seems attainable from the market opportunity and size given as well as the strength of the marketing and operations plans and the management's means to execute them.

Sources and Uses of Funds

Within the financial section there should be details on the funding requirement for the business and who the funders will be. If any funding is secured already, this is certainly information to mention. However, if all funding is still uncertain, this section should at least describe the type of funders that are being targeted. The uses of the funds should then be detailed, showing what the pre-launch startup expenses will be as well as the needs for additional working capital going forward.

Pro Forma Financial Statements

Finally, a full set of pro forma (projected) financial statements should be included in the appendices of the business plan. These financial statements must be completely consistent with the financial summary and sources and uses of funds described earlier. The statements include the income statement (sometimes called the profit and loss statement or P & L), balance sheet, and cash flow statement. Generally, more detail is given for the first three years by showing quarterly results. Additional statements should then show annual results for the first five years.

The income statement shows the revenues and expenses (grouped into appropriate categories), and the profit or loss for each period. The balance sheet shows the breakdown of assets, liabilities and owner's equity in the business at given points of time. The cash flow statement shows the cash inflows and outflows from normal operations, investment in the business, and financing from lenders and investors. The advice of an accountant or business plan consultant familiar with drafting these statements is recommended to make sure that you get them right.

Looking for more expert advice on how to make a business plan? Download Growthink's "Ultimate" Business Plan Template here,, or call 800-506-5728 for a FREE consultation with a Growthink business plan consultant.

Article Source:

Invention Evaluations   Invention Evaluations

Choose the Invention Evaluation Plan that fits your goals and budget.

Inventors such as yourself who are looking to protect and profit from your invention or new product idea each have your unique needs and budgets. That is why we offer several invention evaluation plans for you to choose from that are tailored to the special needs of individual inventors.

Save Money   Invention Packages

Invention Commercialization and Profitability Program

Choose from our Basic, Advanced, or Professional Invention Combo Packages, depending on your particular needs and budget. Each combo package includes your choice of the Invention Sales Package, the Invention Licensing Package, or the Invention Marketing Package.


Invention Evaluations   Crowdfunding

Don't have money to develop your invention into a product?

Crowdfunding makes it possible for you to achieve your invention goal of selling, licensing, or manufacturing products based on your invention that you otherwise might not be able to do using equity or debt financing. And you don't give up any ownership stake in your invention.


Invention Patenting Group
161 Maple Drive
Park City, Utah 84098-5113
Telephone: (866) 279-7174
Facsimile: (435) 649-3801

Copyright 1999-2016 Invention Patenting Group. All rights reserved.

Powered by Joomla 1.7 Templates