Business Finance Plan

A business finance plan is that type of a plan, which involves the decision making regarding how much money should be borrowed by a business. If the need for financing has been felt, a proper business finance plan needs to be devised.
A business finance plan functions as a crucial instrument for the implementation of various ideas whether it is for starting a new business or expanding an existing business. A business finance plan should be trustworthy to the investors and the other segments of the society who support it.

The plan needs to be modified from time to time in order to facilitate future planning. A business finance plan decides what is the amount of finance that is required, what should be the type of financing method, and what are the plans of action that should be initiated to implement the business finance plan.

A business needs both short term and long-term capital. The process of financing the capital is known as capitalization. A sound business finance plan should earmark how much money should be obtained as debt (loan) capital and what extent of money should be obtained as equity capital.

A proper business finance plan should be divided into the following segments:
Executive Summary
Company Description
Market Analysis
Management and Organization
Sales and Marketing Strategies
Products and Services

A business finance plan depends on a number of factors.

A thorough analysis is done with the help of the following factors:
Balance Sheet
Break Even Analysis
Cash Flow Projects
Industry Ratios
Profit and Loss Statements
Other probable risks that are involved

It is the responsibility of the management to observe that the business finance plan prepared by them is able to convey their thoughts in a clear and compact way. The procedure to research and write a business finance plan should assist in elucidating thoughts and locating the lacuna in management data regarding the market, business, as well as the competitors.

In order to approve a business finance plan, the lenders consider the following portions of the business finance plan:
The marketing plan
The business track record
Investment by directors and proprietors
The serviceability of the loan

 

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Last Updated on : 1st August 2013

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