This section covers the financing and cash flow requirements implicit in other areas of the business plan. It contains projections of income, expenses, and cash flow, as well as descriptions of budgeting and financial controls. Financial projections must be supported by verifiable facts, such as sales figures or market research. Monthly figures are generally given for the first two years, followed by annual figures for the next three to eight years.
Financial projections should support everything that was written about the venture in the previous sections of the business plan. An entrepreneur has outlined a great business concept, demonstrated a real need in the marketplace, shown how they will execute their ideas, proven that their team is just right to manage the venture, and now they will show how profitable the venture will be. On the other hand, if the business concept is weak, or there is not a market, or if the execution is poor, or the management team is incompetent, then financial plans are doomed to failure. Every business plan should include the following financial projections: income statements, balance sheets, cash flow, break-even analysis, financial comparisons, and assumptions.