Chapter 18
Making and Using Money Wisely: The Financial Plan
IN THIS CHAPTER
Lining up the parts of a financial plan
Developing financial statements
Analyzing financial statements with ratios
Managing your working capital and accounts payable
To turn your business into a reality requires understanding how you will capitalize it and find the money and resources to grow it. In short, you need a financial plan.
Some successful businesses have launched with back-of-the envelope calculations. They may even have succeeded for a time. But this casual strategy will not sit well with investors or bankers, who need to understand how you arrived at your numbers (and they’ll ask you), because it gives them insight into your growth plans and also into whether you know your business or are just faking it.
If you’re thinking that this process is too frustrating and time consuming, keep this in mind: It’s not what you discover from the results of the process that matter the most; it’s what you discover from going through the process of planning your company’s finances that’s so valuable. Don’t ...
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