Numbers Can Replace a 1000 words in a Business Plan
It is unusual to be able to describe your business in words alone. Even though great thought may have been put into creating eloquent statements about your business, words alone will not suffice. A good description of your business must involve numbers to make your business real. Without the inclusion of numbers, it is an open ended story.
An effective business plan has to include at least four important projected financial statements.
- The profit or loss or income, statement shows sales, cost of sales, operating expenses and taxes. The statement will show performance over some specific time period, like a month, a year or a quarter.
- The balance sheet will show assets, liabilities and capital.
- Assets and liabilities will show a company's financial position.
- The cash flow statement predict how much money is in the bank.
The information from these four statements can then be used to help prepare the balance sheet.
You don't have to know the subject of finance inside and out. However you do need to be able to describe your business numerically.
Ensuring that these numbers make financial sense will go a long way towards you being able to fluently describe your business in numbers.
