''By failing to prepare, you are preparing to fail'' - Benjamin Franklin
''By failing to prepare, you are preparing to fail'' - Benjamin Franklin
Process Steet’s Financial Plan Template is a guide to aid you through the process of producing a financial plan for your small business.
The financial plan template should be used in conjugation with Process Steet’s financial planning process. Once the financial planning process has been completed, the financial plan template can begin, utilizing the information obtained from the financial planning process.
Process Steet’s Financial Plan Template has condensed the process of creating a financial plan into the following tasks:
As mentioned before in the Financial Planning Process, 78% of small businesses fail due to the lack of a well-developed business plan, 77% fail due to incorrect pricing, and 79% fail due to starting out with too little money.
The above are failings which can be avoided with an effective financial plan.
The aim of Process Steet’s Financial Plan Template is to help you produce a financial plan for your small business, to prevent business failure, and to enable you to actively plan ahead.
In this template, you will be presented with specialized questions given as a form field. Different form fields are used, such as subtasks, dropdown menus, short answers, long answers, and weblinks.
You can populate each form field with your own specific data.
Our stop task feature has been used to enforce task order when needed.
In addition, our conditional logic task has been used as required to guide you through the correct process path specific for your entered data.
In this Financial Plan Template, you will be presented with the following form fields, which you are required to populate with your own specific data. More information is provided for each form field via linkage to our help pages:
To begin the Financial Plan Template, enter the required details into the form fields below.
This task is a stop task. You cannot move forward in this Financial Plan Template until tasks are complete.
Please note there is no set way to complete a financial plan. You can adapt this template yourself to suit your unique needs using our template editing feature.
We recommend you hire an accountant to check through your financial plan.
To complete a financial plan for your business, you must first be sure to have a completed and up to date financial statements with the relevant forecast projections.
See Process Street's financial planning process to see how you can forecast values in the financial statements for future planning and build your financial model.
In this section of the Financial Plan Template, you will be consulting your up to date profit and loss statements, and forecast profit and loss statement values.
In the file upload widget below, you can upload your profit and loss statements including future forecasts created in your financial model.
Alternatively, you can provide a link to online documentation, such as a Google excel sheet.
Once you have consulted the uploaded/linked profit and loss statement, you can complete the subtasks, checking off each subtask when it is completed.
Consider the following:
Profit and loss statements are usually provided at each fiscal year quarter. They provide a summary of your companies revenue, costs, and expenses.
You can use your calculated net revenue to calculate your current gross margin using the formula below.
Gross margin is a profitability ratio representing leftover dollar or revenue after paying cost of goods sold.
Consult your profit and loss statement once more, and make a list of your current operating expenses and your forecast operating expenses. You can use the web link form field below to link online documentation, such as a Google document, of this list.
Alternatively, you can upload this list as a file using our file upload widget.
Operating expenses are defined as fixed expenses, occurred during the normal operations of a given business. Operating expenses do not fluctuate with revenue strength.
To visualize the running of your business with a broader view, it is important to consider your finances for each month you have so far been operational in.
Check each month you will be considering in your calculations. The multiple choice form field provided represent a conditional logic step in the Financial Plan Template. Selecting a specific month will direct you to the relevant stage in this process.
Calculate January's monthly revenue.
Consider the following:
If you have been operational for more than one year, you can calculate the net income on an annual basis. This is a conditional logic step. By choosing yes from the dropdown menu below, you will be directed to the relevant tasks as appropriate.
Once you have calculated the net income for each operating month, you can calculate the annual net income. Consider the following:
From the calculated monthly net incomes, you can create a chart, such as a bar chart, displaying this information. Charts are a great tool to display a lot of information in an easy to understand format.
Use each month on the Y-axis and the net income on the X-axis.
From the calculated annual net income/s, you can create a chart, such as a bar chart, displaying this information. Charts are a great tool to display a lot of information in an easy to understand format.
Use each month on the Y-axis and the net income on the X-axis.
See Process Street's financial planning process.
You should have the information on your financial statements projected into the future, and as far into the future as you deem necessary for your businese's financial plan.
Consider the following values:
You can use your calculated forecast net revenue to calculate a forecast for gross margin using the formula below.
Gross margin is a profitability ratio representing leftover dollar or revenue after paying the cost of goods sold.
To your annual and/or monthly charts, display the following forecast information. Display this information in a separate color so the forecast values can be separated from the actual values.
Use each month on the Y-axis and the net income on the X-axis.
82% of businesses fail because of poor cash flow management. Producing a cash flow statement, understanding and managing your cash flow is extremely important.
The next stage of Process Street's financial plan template is to consider the cash flow statement and the forecasts made and added to this financial statement.
The cash flow statement provides information in regards to the amount of cash your business brought in, the amounts of cash the business paid out, and what the business ending cash balance was. Cash flow statements are required on a monthly basis to provide the needed understanding of the amount of cash your business has, where the cash is coming from, where the cash is going, and on what schedule.
82% of businesses fail because of poor cash flow management. Producing a cash flow statement, understanding and managing your cash flow is extremely important.
Once you have calculated the cash flow for the operating month, consider the cash flow for each operating year.
The cash flow statement provides information in regards to the amount of cash your business brought in, the amounts of cash the business paid out, and what the business ending cash balance was. Cash flow statements are required on a monthly basis to provide the needed understanding of the amount of cash your business has, where that cash is coming from, where the cash is going, and on what schedule.
As you have done for the monthly net income, you can visualize your monthly cash flow trends via displaying your monthly cash flow as a chart, such as a bar chart.
As you have done for the annual net income, you can visualize your annual cash flow trends via displaying your annual cash flow as a chart.
To your annual and/or monthly charts, display the following forecast information. Display this information in a separate color so the forecast values can be separated from the actual values.
Use each month on the Y-axis and the net income on the X-axis.
The next stage of Process Street's financial plan template is to consider the balance sheet and the forecasts made and added to this financial statement.
See Process Street's Balance Sheet
Consider the below information from your balance sheet and your balance sheet forecasts.
The next step of Process Steet’s Financial Plan Template is to calculate the cumulative profit for your business.
Retained earnings is a business's net income left over for business after the business has paid out dividends to its shareholders.
You can use your forecasts to calculate a forecast for your cumulative profit as per the formula below.
To your annual and/or monthly charts, display the following forecast information. Display this information in a separate color so the forecast values can be separated from the actual values.
Use each month on the Y-axis and the net income on the X-axis.
Using Process Street's financial planning process, you would have created a series of different financial forecast models. Each of these models would have used a different method to deliver the required forecasts.
You should consider every different model produced. These different models can then be tested in order to obtain a financial model of best fit for your business.
You can view the trends in your data from your plotting graphs for the following:
Form viewing your data displayed visually, you can view anomalies or abnormal data points.
The dropdown menu represents a conditional step in this financial plan template. Selecting 'Yes' or 'No' will direct you to the relevant stage in this process.
Abnormal data points could be outliers or unrealistic forecasts.
You have identified abnormal data points that need to be investigated and explained.
Abnormal data point could be ''rogue'' data or seasonality impact, environmental impact, human error or changes in the business environment.
See what was happening at the time period of any anomaly to explain the abnormality.
You could have an unrealistic forecast, for example, a sales increase of 400%. You can adjust your assumptions in your model to account for this.
Can you identify possible future changes that will occur, for which you know the impact? For example, the sales increase for new contract signs.
Detail known changes that need to be added to your forecast model.
Look at a short time period which you have forecast financial parameters to test. Compare your forecast parameters to the actual financial parameters obtained in this time period.
To perform this comparison we will employ the within sample technique.
An ''in-sample'' prediction uses a subset of data to forecast values outside the estimated period. It is the sample data you know at the time you are building your model.
An ''out-sample'' forecast is used to evaluate the forecasted performance, reflecting the information available to the forecaster in real-time.
You have created your financial model and tested it against the real data available. It is time to choose the model of best fit with your data.
As a small business, calculating your personal effects on the business should take no time and can be completed using one or two sentences.
Check off the sub-tasks below on completion.
You can write your personal plan below in the long text form field. Ensure your personal plan includes the information listed as needed above.
Creating a personal plan is more important for larger businesses. Larger businesses are more complex, and time should be spent working out how you personally impact the business.
You might want to consider the below business ratios for the completion of your financial plan. This next section is looking at calculating key business ratios not yet considered.
Select the below business ratios you would like to include in your financial plan. The below is a conditional step, depending on each option you choose will determine the relevant page you are then directed to.
You can calculate these ratios on both your actual financial data and your forecast financial data.
Using the multiple choice form field below, select the business ratios you would like to calculate.
To calculate the return on sales ratio, you can use the operating income and the net revenue which have been calculated in the previous tasks.
The return on sales is a ratio evaluating a company's operating efficiency.
To calculate the return on your investment, you must divide the net income previously calculated by the total investment. Multiply this by 100 gives the return on investment as a percentage.
The return on investment is a ratio used to evaluate the efficiency of an investment. It can also be used to evaluate the efficiency of a number of different investments.
To calculate the Debt-To-Equity ratio, you must refer back to your balance sheet.
Consult your balance sheet to obtain the below information:
The debt-to-equity ratio is used to measure companies financial leverage, that is, it measures the extent a company is financing its operations through debt versus wholly owned funds.
To calculate the Current Ratio, you must refer back to your balance sheet.
Consult your balance sheet to obtain the below information:
The current ratio is a liquidity ratio measuring a companies ability to pay short-term obligations (short term obligations are those due in one year). The ratio provides information to investors on how current assets can be maximized to satisfy current liabilities.
To calculate the Working Capital you must refer back to your balance sheet.
Consult your balance sheet to obtain the below information:
A company with substantial working capital has the potential to invest and grow. The working capital indicates a companies financial health in the short term, liquidity and operation efficiency.
Conducting break-even analysis is vitally important to measure your business growth. Break-even analysis helps you determine your fixed and variable costs to ensure that you set your service/product prices effectively to ensure a profit is made.
You can perform the break-even analysis on your current data, to see how you are currently performing, and on your forecast data, to see how you are expected to perform in the future.
In this Financial Plan Template, we are going to calculate the break-even point based on sales in dollars.
To begin, the contribution margin needs calculating. The formula used to calculate the contribution margin is given below.
To give your contribution margin as a percentage, divide the value obtained from the above by the price of the product/service and multiply this by 100. This is termed the contribution ratio.
The break-even point of a business is the stage where the revenue equalizes with its costs.
The contribution margin indicates the incremental money generated for each product/service sold after the deduction of the companies variable costs per unit. It measures how much an individual product/service contributes to the profitability of a company.
You can use the contribution margin value to calculate your break-even point. Use the formula below to do this.
Once you have calculated your break-even point, you can determine the sales needed for you to make the required profit.
Your financial plan produced, business ratios calculated and your break-even analysis will provide key information for your current business performance and your projected business performance. You can analyze this information to identify warning signs and areas for financial improvement.
Based on the previously identified, current and predicted, warning signs and areas for improvements, you can produce an action plan.
The action plans aim is to mitigate against concerning financial parameter values and to improve your business financials based on the identified areas for improvement.
You can use our file upload widget below to upload your detailed action plan.
This is the final step in the financial plan template. The documents produced from running this template should be easy to read and understand. It is important to review these documents.
We recommend you hire an accountant to check through your financial plan.
You can use Process Street's email widget below to schedule an appointment with your accountant.
