Chapter 4

Financial Plan

Looking Ahead

Upon completion of this chapter, you should be able to

  1. explain the purpose of the financial plan;
  2. prepare the following financial statements: income statement, cash-flow projection statement, and balance sheet;
  3. determine the start-up capital requirements for a business;
  4. choose appropriate sources of start-up capital; and
  5. devise a repayment plan for start-up capital.

Purpose of the Financial Plan

Planning the financial affairs for a start-up firm is critical to success because many businesses fail during the first 3 years of operation due to poor financial plans and inadequate funding.

The financial plan section of the business plan outlines future sales revenue, expenses, and profit or loss. It also details ...

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