This is the section that can make or break a business plan.
You might have a fantastic proposition, a great product and a passionate team, but if your finances don’t add up, or your forecasts are unrealistic, it will let the whole plan down.
If you’re not good with numbers, try to find someone who is to help you check that everything makes sense. There are lots of free templates on the internet that will do the sums for you.
We’ve produced a simple business plan template and financial template (available to download below) to get you started.
Remember, these are only as good as the data that you put in.
Financial forecasting is a best guess of what your income and expenditure is going to be. Try to find out as much information as you can about your costs, income and likely sales before you start to work out the numbers.
Most voluntary organisations will be used to managing a budget of some kind. However, you may not be used to using a cash flow.
A budget is how much you have to spend on particular items over a specified period. You would use this to manage a grant, for example. You know how much you have, and you may have secured the income already.
A cash flow forecast is a prediction of your income and expenditure over a specified period, usually 12 or 15 months. If you’re generating income from trading (sales), a cash flow forecast is vital to ensuring that you have enough money in the bank to cover your costs. It will also tell you if and when you need to borrow money, for example through an overdraft facility or with a bridging loan.
You can manage cash flow by finding ways to spread your costs. Find out if you can pay your bills by monthly Direct Debit, rather than in a lump sum. Review your suppliers regularly and ask for new quotes at least once a year. Make sure you prepare for delays in payments from clients – you might not receive payment in the same month that you issue an invoice.
Follow the instructions below to complete the cash flow forecast in the financial tables template. When you’re done, you can copy the table from Excel into your business plan.
For example, you might expect seasonal variations in sales or lower attendance during holiday periods. Make sure you plan for annual increases to rates or travel costs.
Give as much information as you can in the assumptions column to help the reader understand how you came up with your figures. If you need to cover periods of negative cash flow, set out how you plan to do this here.
It’s hard to predict exactly how much you’ll sell, but if you have a good understanding of your target market and a clear pricing strategy, you should be able to make a reasonable estimate.
Follow the instructions below to complete the cost table in the financial tables template. When you’re done, you can copy the table from Excel into your business plan.
Last reviewed: 04 July 2022
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