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The importance of financials in a business plan.

If you’re looking for investment or applying for a loan, the chances are that you will need to submit a business plan. Although it’s obviously important to have a sound business idea and to communicate your own commitment to success, in our experience the majority of readers of business plans flip straight to the financial projections. So it’s vital that these make sense. That’s where accountants can help.

A set of financial projections don’t need to be too complicated, but they need to show the investor or lender what you expect the books of the company to look like in one, three and five years’ time. You need to forecast sales, margins, payroll and other expenses, and to show how the capital and assets of the business will need to grow as turnover increases.

There’s nothing worse than seeing a good business plan spoiled by poor book keeping in the financial projections. Fairly or otherwise, investors tend to assume that if the financials have mistakes or unrealistic assumptions, the business will not be well managed either. That’s why it often makes sense, if you’re looking for a large investment or a business growth loan, to get a firm of accountants to spend a bit of time looking at this crucial section of your business plan.

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