Financial Data

Part I is written in prose style, but Part II of your business plan is presented in spreadsheets, charts, and graphs. Here you get into the real nuts and bolts: how much it costs to run the business, and how much money is to be made.

First, analyze and show the financial history of the company under current ownership. Banks want to see at least three years' history, and they want to see a pattern of profitability. If the company has not been profitable, then they'll see it as a bad risk. If you have a plan for turning that around, it had better be a really good one—and very convincing. You'll have to overcome skepticism and (worse) entrenched bank policies.

Analyze what it costs to run the business per month, per quarter, and per year.

• Personnel costs: Salaries, benefits, raises

  • Office rent or building purchase payments

• Utilities and ongoing expenses: Electricity, gas, water, trash removal, cleaning service, telephone, internet access, Web hosting

• Capital expenses:

  • Computers, printers, scanners

  • Telephones, faxes, answering machines

  • Teleconferencing equipment, projectors for presentations

  • Desks, chairs, filing cabinets, credenzas

  • Conference tables, chairs

  • Coffeemaker, refrigerator, microwave, toaster

• Supplies:

  • Printer ink, printer paper

  • Pens, pencils, erasers, staples

  • Batteries

  • Coffee, sweetener, creamer, filters

  • Cleaning supplies

• Analyze where the money comes from: development milestone payments, royalties, direct sales

  • How much

  • How often

• Break-even

• Desired profit margin

• Profit & Loss analysis

  • Year One—per month

  • Year Two—per quarter

  • Year Three—per quarter