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Financial Planning Process

Financial Planning Process

Process Street’s Financial Planning Process is a guide to aid you through the process of producing a financial plan for your small business.
1
Introduction:
2
Record checklist details
3
State assumptions using your income statement:
4
Create the required financial statements
5
Assume your growth rate
6
Calculating compound annual growth rate
7
Assume your cost of goods sold
8
Calculating cost of goods sold
9
Assume your general and administrative expenses
10
Assume depreciation
11
Calculate depreciation and amortization
12
Assume interest expense
13
Assume unusual items
14
Assume tax rate
15
Communicate your assumptions
16
State assumptions using your balance sheet:
17
Assume accounts receivable
18
Assume inventory
19
Assume other current assets
20
Assume accounts payable
21
State assumptions using your cash flow:
22
Assume your capital expenditure
23
Assume your debt insurance
24
Assume you equity insurance
25
Assume your cash from dividends
26
Project forwards for income statement:
27
Calculate the gross profit
28
Forecast SGA costs
29
Forecast depreciation and amortization costs
30
Forecast long term debt
31
Forecast net interest expense
32
Forecast operating income
33
Forecast unusual items
34
Forecast earnings before taxes
35
Forecast tax expenses
36
Forecast net income
37
Project forwards for the balance sheet:
38
Forecast capital expenditure
39
Forecast accounts receivable
40
Forecast other current assets
41
Forecast inventory
42
Forecast accounts payable
43
Project forwards for the cash flow statement:
44
Add the required information from the income statement to the cash flow statement
45
Forecast receivables
46
Forecast Inventory
47
Forecast account payable
48
Forecast other items
49
Forecast cash flow from operations
50
Forecast cash from investing
51
Forecast cash from financing
52
Forecast pre-forward transactions change in cash
53
Forward transactions adjustment
54
Forecast net change in cash
55
Project forwards for the balance sheet continue:
56
Forecast other current liabilities
57
Forecast total current liabilities
58
Forecast other long term liabilities
59
Forecast total liabilities
60
Forecast other long term assets
61
Forecast cash
62
Forecast total current assets
63
Forecast total assets
64
Forecast stock per capita
65
Forecast retained earnings
66
Forecast minority interest
67
Forecast total equity
68
Forecast total liability and equity
69
Check to see if your forecast balance sheet is balanced
70
Sale forecasts:
71
Ask yourself key questions
72
Determine your market segment
73
Perform quantitative sales forecasting
74
Perform qualitative sales forecasting
75
Financial plan production:
76
Get ready to produce your financial plan
77
Sources:
78
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