You’ve decided to become your own boss. Congratulations! Now it’s time to get down to business and that means creating a small business financial plan says Michael Osland.
Your financial plan is a roadmap for your business that will outline your start up costs, operating expenses and revenue. It’s an essential part of your overall business plan and will help you raise money from investors, apply for loans and manage your finances.
Follow these 10 steps to create a small business financial plan:
1. Know Your Numbers:
The first step in creating a financial plan understands your current financial situation. This means knowing your revenue, expenses, profit margins and cash flow. You can’t create a plan if you don’t know where you’re starting from.
2. Set Your Financial Goals:
The next step is to set some financial goals for your business. Do you want to be profitable within the first year? Are you looking to expand your business by opening new locations? Whatever your goals may be, make sure they are specific, measurable and attainable.
3. Create a Budget:
Once you know your numbers and have set your financial goals, it’s time to create a budget. A budget will help you track your expenses, control your spending and save money.
4. Make a Cash Flow projection:
In addition to a budget, you’ll also need to create a cash flow projection says Michael Osland. This will show you how much money you can expect to come in and go out of your business on a monthly basis.
5. Know Your Financing Options:
Before you can start raising money for your business, you need to know what financing options are available to you. There are several types of loans, including SBA loans, lines of credit and business credit cards. You will also want to consider investment from friends, family or venture capitalists.
6. Create a Fundraising Plan:
Once you know your financing options, it’s time to create a fundraising plan. This plan will outline how much money you need to raise and when you need it.
7. Prepare Your Financial Statements:
In order to secure financing for your business, you will need to prepare financial statements. This includes your balance sheet, income statement and cash flow statement.
8. Get Insured:
Another important part of your financial plan is getting insured. This will protect your business in the event of an accident, natural disaster or lawsuit explains Michael Osland.
9. Plan for Taxes:
No financial plan would be complete without taking taxes into account. You will need to set aside money for federal, state and local taxes. You may also be responsible for self-employment tax if you are the sole owner of your business.
10. Review and Revise Your Plan:
The final step in creating your financial plan is to review and revise it on a regular basis. As your business grows and changes, so will your financial needs. By reviewing and updating your plan, you can make sure that your finances are always in order.
Creating a small business financial plan may seem like a daunting task, but it’s an essential step in starting your own business. By following these 10 steps, you can be sure that you’re on the right track to financial success.
If you need help putting together your financial plan, there are many resources available, including books, websites and software programs. You can also hire a professional consultant to assist you. The most important thing is to get started and to keep your financial goals in mind. With a little effort, you can create a solid plan that will help your business thrive.
Conclusion:
A small business financial plan is an essential step in starting your own business. By following these 10 steps, you can be sure that you’re on the right track to financial success says Michael Osland. If you need help putting together your financial plan, there are many resources available, including books, websites and software programs. You can also hire a professional consultant to assist you. The most important thing is to get started and to keep your financial goals in mind. With a little effort, you can create a solid plan that will help your business thrive.
