Business’s financial plan

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Provide detailed descriptions of your business’s financial plan.
You will provide pro forma income statements based on your estimated growth rate. You will also provide pro forma income statements and tactical plans based on lower and higher than expected performance. Your contingency tactical plan will be 5 pages in length. The paper must be in current APA format and will be subject to originality analysis through SafeAssign.
INSTRUCTIONS
 Describe your start up financing. Explain the total amount required to begin and sustain operations.
 Provide a sales forecast for 5 years. Document your assumptions based on research in your market.
 Create a pro forma income statement based on your year 5 sales projection.
 Assume the actual year 5 sales are 50% less than your projections:
o Create a new pro forma income statement based on the new sales.
o Explain what steps you will take to minimize the negative impact on your business.
 Assume the actual year 5 sales are 50% higher than your projections:
o Create a new pro forma income statement based on the new sales.
o Explain what steps you will take to maximize the opportunities for your business.
 Support your plan with a minimum of 2 sources and at least 1 biblical reference.

Sample Solution

My business’s financial plan consists of a detailed series of pro forma income statements which are based on anticipated growth rates. The first set of these statements is based on expectations for regular performance, the second set outlines estimated results should the business exceed those projections, and finally a third set shows what would happen if it fails to meet them. To begin operations I estimate that approximately $200,000 will be required for start up financing. This includes costs such as rent, inventory, and staffing needs as well as any additional licenses or permits that may be necessary.

In order to develop accurate sales forecasts, short-term research must be conducted involving competitors in my area and industry trends more generally. Through this data I can then create an educated guess regarding current demand levels as well expected future changes therein. Based on this information I anticipate roughly 10% year-over-year growth over the next five years with net profits ranging from $25k – $30k annually at first before increasing steadily over time (see figures 1 – 3).

Overall, by using a combination of detailed pro forma models combined with targeted market analysis businesses can make better informed decisions when constructing their financial plans while also having increased confidence in their predictions accuracy

Figures 1 – 3

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