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Writing a Business Plan

Financial Section


Overview of the Economy
Overview of the Industry
Sources for Funding
Capital Equipment
Balance Sheet
Break-Even Analysis
Income Projections
Cash Flow Projection
Deviation Analysis
Historical Reports for Existing Business


Overview of the Economy

  • U.S. Bureau of Economic Analysis
      Produces statistics about domestic production, consumption and investment, along with detailed data on economic activity by region, state, metroplitan area, and county.
  • Federal Reserve District Banks Publications
      • These are reviews of economic conditions of specific regions. Find your geographic area and look for "publications".

    Overview of the Industry

    Consult the web guide, How to Find Industry Information for database resources that provide overviews and reports of many industries.

    Sources for Funding

    Books can be useful in locating sources for funding a business. You can find books in the Baker University Library catalog. Some are even available in electronic format through the eBooks Collection (EBSCO) database.

    In the Baker University Catalog, use the term, small business finance and click on Subject. By checking the libraries in our consortium, you'll find even more titles. Change the dropdown box from Baker University Library to ALL.

    Your screen should look like this:
    catalog_small_business_finance

    In the eBooks Collection (EBSCO) database, use the term, small business AND finance

    Other resources you may find useful:
    1. Books Angel Investing: Matching Startup Funds With Startup Companies: The Guide for Entrepreneurs.Mark Van Osnabrugge. Jossey-Bass, 2000.
    2. web siteBusiness Finance.com
    3. BooksCorporate Finance Sourcebook. Reed-Elsevier, annual.
        This directory includes venture capitalists, private lenders, commercial banks, investment banks, business intermediaries and more.
    4. BooksDirectory of Venture Capital and Private Equity Firms, Domestic and International. Grey House Publishing, 2010.
      You may request this on interlibrary loan.
    5. PeriodicalsEntrepreneur Magazine's Financing Your Small Business: How to Raise the Money You Need. Entrepreneur Media, 1999.
      You may request this on interlibrary loan.
    6. web siteNational Venture Capital Association
    7. Books Government Assistance Almanac. 2000-2001.
        14th ed. J. Robert Dumouchel.
        This source provides information on all kinds of domestic programs available from federal agencies which help users obtain assistance.
    8. Books Home Office and Small Business Answer Book: Solutions to the Most Frequently Asked Questions about Starting and Running Home Offices and Small Businesses. 2nd ed. Janet Attard. Henry Holt, 2000.
    9. Books How to Find Money Online: an Internet-based Capital Guide for Entrepreneurs. Alan Joch. McGraw-Hill, 2001.
    10. Books Pratt's Guide to Venture Capital Sources. Capitol Publishing. Annual.
        This is the best-known directory of capital venture sources. Contact information and funding preferences are given for each investor. Articles regarding the venture capital industry and funding processes are included.
    11. Books Raising Capital: Get the Money You Need to Grow Your Business. Andrew J. Sherman. Kiplinger Books, 2000.
    12. web siteSBA's Outside Resources and Great Business Hotlinks
    13. web siteSmall Business Administration
    14. web siteSmall Business Development Centers
    15. web siteU.S. Business Advisor

    Capital Equipment
    • Equipment used to manufacture a product, provide a service, or sell, store, and deliver merchandise
    • NOT equipment used in the normal course of business but equipment one will use and wear out as one does business.
    • Does not include items expected to be replaced annually or more frequently.
      1. websiteThomasNet
        Find suppliers for more than 67,000 categories.
      2. The Internet, in general.
      3. Vendor catalogs
      For start up costs, see:
      Starting Costs Calculator
      • You can use this calculator to quickly determine your:
        • Cash Flow
        • Break-even
        • Monthly Profits
        • Investment Required
        • Money at Risk

    Balance Sheet
    • Designed to show how the assets, liabilities, and net worth of a company are distributed at a specific point in time.
    • Format is standard.

    Comparative Sources (used for benchmarking)

    Break Even Analysis
    • Provides a sales objective at which your business will break even.
    • Sales=Fixed Costs + Variable Costs
      •    OR
    • Sales=Fixed Costs / Gross Margin (profit on sales)

    Income Projections
    You should produce:
    • Three Year Summary
    • Detail by month for first year
    • Detail by quarter for second and third years
    • Notes of Explanation
        Some explanations can produce:
      1. best case scenarios
      2. worst case scenarios
      3. most likely scenarios.
    • Profit and loss statements.
    • Complement the balance sheet
    • Provides a moving picture over a period of time.
    • Again, use publications such as RMA or trade associations for comparisons.

    Cash Flow Projections
    You should produce:
    • Detail by month for first year
    • Detail by quarter for second and third years.
    • Notes of Explanation
      1. Shows how much cash your business will need.
      2. Details whether to seek equity, debt, operating profits, or sale of fixed assets.
      3. Shows where the cash will come from.

    Deviation Analysis
    • Looks at the various parts of the business.
    • Are some parts doing better than others?
    • Are you deviating more from projections than expected in certain areas.

    Historical Reports for Existing Business