10 key points for a Financial Plan your online business

In here we know many entrepreneurs who have good business ideas and they understand well the market in which to compete. However, it is common for these entrepreneurs unknown or feel lost in the financial side of the company and have difficulties in constructing or analyzing a good financial plan for your company or business online. Is my business profitable? How do I make a feasibility study? How do I develop a business plan before creating my company? These are some of the questions most often recur when starting a business and consider the financial analysis.

In this post we want to help these entrepreneurs to make a financial plan with some examples and answer 10 key questions:

  1. What do I need to make a financial plan?

The main reasons for the need to make a financial plan for your new business are:

  • Namely financing needs in the short term – daily operation of the company and long-term – investment financing.
  • Knowing the economic viability and potential returns.
  • Meet the minimum sales volume needed to start making money (break even or neutral).
  • To study the sensitivity of your business to the main factors: sales growth cost etc.

It is important not to obsess about the accuracy of the forecasts, the value of a financial plan is in the questions and reflections raised and the support it can give to our decisions.

10 key points for a Financial Plan your online business

Napoleon and Eisenhower used to say:

“The plan is useless, but planning is essential. ”

“The plan is useless, but planning is indispensable.”

  1. Same thing a financial plan that a business plan?

The financial plan is part of the business plan. The business plan is a comprehensive document that describes and analyzes all aspects of the business: strategy, marketing, sales, purchasing, production, distribution, organization and includes financial course.

  1. What content should have a good financial plan?

The basic elements of a business plan are:

  • Income statement
  • Investment Plan
  • Balance
  • Cash flow

It is very common also incorporate the following:

  • Breakeven Analysis
  • Sensitivity analysis
  • Business valuation
  1. How can I take advantage of the format of the financial plan that calls me the Bank, Enisa or other organization or institution?

Often the entrepreneur is forced to make a financial plan in the format required by a third party: a bank, agencies such as Enisa, CDTI …

These models are always very similar and cover the accounting part of a financial plan, ie: income statement, balance sheet, and cash flows for three to five years. In this situation, we recommend taking the obligation to make these financial plans to model good financial key to our business. But ultimately always ends up covering the aforementioned accounting formats and analysis has an important value, we can get a lot out the model simply by linking the key indicators of our business with the accounting model.

For example, The line of business or sales figures we can calculate on the basis of our sales forecast for each product market segment and we have defined. We can also break it down into units and unit price …, all simulations allow us to detect weaknesses or at greatest risk in our business.

  1. The financial plan for an online store or a startup is necessary? What can I help?

When you start to define how to perform an online store or any other online business many questions such as: how I can fanciest in the design or development of the platform, how to reserve for marketing, which sales need to recover the money, if I put a salary much can I charge, at what price and discounts can put to feasible … Obviously, there will never be a single answer to all these questions but the financial plan is an ideal tool to test all possibilities and minimize the risks of our release.

  1. EBITDA, EBIT, Cash-Flow: What acronyms or terms mean?

In the financial plans, many acronyms and names for many entrepreneurs are impossible to decipher handled. Some of them are:

  • Gross Margin: The resulting margin when sales subtract only “direct” costs ie consumption made necessary to produce our goods or services. It is advisable to research the average gross margin with other companies in the same sector.
  • EBITDA: Gross Earnings before interest, tax and amortization (also called EBIT). It is obtained by subtracting the gross margin and operating overheads. This result gives us an idea of “money” generated by the business; it is a clean figure that is not “contaminated” by the effect of taxes, interest and amortization.
  • EBIT: Net profit before interest, tax and after amortization.
  • Cash flow or cash flow: One of the most important elements of the financial plan. Account accounting annual or monthly results (income-expenditure) will tell us whether the business is profitable or not, but the evolution of the box (fees-payments) will tell us whether we need financing in each period or if we have the surplus box.
  1. With a financial plan, I can know how much better my project or company?

If you are looking to sell our company or we admit new members, we need a starting point, most commonly used to evaluate how a company or startup is the “Valuation by discounted cash flow.” As the name suggests is based on knowing the case that each year will generate business and “deduct interest” or bring these amounts at present value. It is essential to have a good financial plan if we know the value of our company, working well the model can know which indicators are most may be affecting the value of the company.

  1. How can I know if my financial plan is well calculated?

To validate the reliability of a financial plan has to be analyzed separately:

  • The hypothesis or data entered into the model.
  • Calculations performed by the financial model.

In the first part, the data entered, there is no fixed for validation only a good knowledge of the industry, market and competition we will indicate whether the data are realistic or not rule.

Regarding the model calculations, it is important that we confirm an expert before you start using any model, which is well designed. It is common to find models where the income statement, balance sheet, and cash flow are not well connected to each other or simply operate independently, this and other design errors can make our projections are not consistent.

  1. What information do I need to start making the financial plan of my new company?

In order to start making a financial plan is required to gather the following information:

  • Unit sales prices and estimated by product-service-market.
  • The cost structure for obtaining service or product.
  • Estimated staff costs.
  • Expenses General and administrative services.
  • Cost and plan investments.
  1. I cannot do a financial plan … Should I learn? Who can help me?

In the questions and answers above you can see that the realization of a good financial plan requires a combination of knowledge and skills:

  • Knowledge of the business: price, margins, costs …
  • Technical and analytical knowledge of financial models.

Some entrepreneurs have on your computer with both profiles but it is very common that the entrepreneur knows the business but does not have the technical knowledge to make a financial plan. In these cases there is always the possibility of forming, but since we recommend that entrepreneurs focus on the business side that really dominates and relies on freelance professional experts for your financial plan.

Need more information to create your financial plan? Currently, you have a free counseling service which will help you select the best professional freelance for your draft financial plan.

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