Budgeting and Cash Forecasts Few small businesses that I've worked for have prepared a formal business plan unless they had to in order to obtain financing. If this describes your business you don't have to feel like the Lone Ranger. Quite a few don't prepare business plans, budgets, or cash forecasts and some unfortunately don't even maintain formal up to date financial records. With the relatively inexpensive tools available and a little effort your business can begin using some tools that will help you identify potential problems and allow you the time to take corrective action. Return To Bookkeeping and Accounting Tutorials What Will You Find On This Page ? Below you'll find excellent links to articles, tutorials, and tools to aid your company in budgeting, cash flow management, and business plans. Each link to the sites contains a brief excerpt in order to help you determine if it will be of any benefit to your business. Budgeting A budget is a plan to ensure that you have the money for your future business activities which allows you to make confident financial decisions by relying on solid figures that would otherwise have been based around guesswork and instincts. A budget is a planned outcome of the future that the business wants to achieve. In a nutshell, budgeting is simply planning and the process of creating a budget is simple if you have access to appropriate and accurate information and the right tools. Courtesy of BizHelp Budgeting Article defines budgeting and the resulting benefits. Budgeting prepares for the future and foresees problems before they occur. Courtesy of LayNetWorks Budgets A budget is a plan expressed in quantitative, usually monetary term, covering a specific period of time, usually one year. In other words a budget is a systematic plan for the utilization of manpower and material resources. In a business organization, a budget represents an estimate of future costs and revenues. Budgets may be divided into two basic classes: Capital Budgets and Operating Budgets. Courtesy of Arkansas Small Business Development Center Budgeting For The Small Business A budget is a forecast of all cash sources and cash expenditures. It is organized in the same format as a financial statement, and most commonly covers a 12-month period. At the end of the year, the anticipated income and expenses developed in the budget are compared to the actual performance of the business as recorded in the financial statements. Courtesy of Small Business Notes Budgeting Systems Budgeting is detailed planning for the allocation of funds in a business. Courtesy of NOLO Law How to Make a Budget and Stick with It A realistic budget is your best weapon against overspending. Cash Forecasting Cash is a business's most precious asset. Managing Cash Flow is one of the most important tasks every top manager and business owner must be able to understand. Believe it or not, many businesses have had to shut their doors not because they weren't making a profit, but because they weren't managing and controlling their cash. A Cash Forecast is simply a tool that a businesses uses to plan: How Much and When is Money Coming In? How Much and When is it Going Out? Bean Counter's Managing Cash Tutorial So, you want to learn Bookkeeping! - Cash Bean Counter's Bookkeeping Tutorials Everything you need to know about Cash in a few easy lessons. Explains record keeping, petty cash, bank reconciliations, cash controls, and cash forecasts. Includes Free Cash Forecasting Excel Template. Courtesy Of Arkansas Small Business Development Center Managing Cash Flow Do you understand how your cash comes and goes? Do you know what your cash balance will be before it is too late? Can you make a cash plan for next month or next year? The tools to answer these and other questions are provided for you in this workbook. Cash Flow Analysis To be competitive, small business owners must plan and prepare for all future events and market changes. Possibly the most important aspect of preparation is effective cash-flow planning. Failure to properly plan cash flow is one of the leading causes for small business failures in the United States. Courtesy of by BankRate Understanding Cash Flow This article explains how Cash Flow Analysis provides a means for you to conduct a periodic check on your company's financial health. A projected cash flow statement estimates what the stream of money will be in coming months or years, based on a history of sales and expenses. Courtesy of Commerce Clearing House (CCH) Managing Your Cash Flow A healthy cash flow is an essential part of any successful business. Some business people claim that a healthy cash flow is even more important than your business's ability to deliver its goods or services! That may be placing a bit too much importance on your cash flow, but consider this — if you fail to satisfy a customer and lose that customer's business, you can always work harder to please the next customer. But if you fail to have enough cash to pay your suppliers, creditors, or your employees, you're out of business! No doubt about it, proper management of your cash flow is a very important step in making your business successful. Cash Flow Budget Explanation of a cash flow budget and a downloadable Microsoft Excel spreadsheet template. A cash flow budget is a projection of your business's cash inflows and outflows over a certain period of time. A typical cash flow budget predicts the anticipated cash receipts and disbursements of a business on a month-to-month basis. However, a cash flow budget could predict the cash inflows and outflows on a weekly or daily basis. Because of the uncertainty involved in the cash flow budget, trying to project too far into the future may prove to be less than worthwhile. At the same time, a cash flow budget that doesn't look far enough into the future will not predict future events early enough for you to take corrective action in your cash flow. Courtesy of BuzGate Can I Pay My Bills? A nice article written by Dr. William R. Osgood. Cash flow management is a problem for almost any firm, large or small. The worst symptom of the problem: the business runs out of cash. Watching a business floundering, running out of cash even as it makes great sales and profits is painful. Painful though it may be, it is common and repeatedly the cause of business failure. Ebook-Courtesy of SmallBusinessTown Cash Flow Projections Requires Adobe Reader-book is in PDF Nice free 87 page manual loaded with useful information that includes: Basic Budgeting Terminology Preparing A Budget Avoiding The Cash Flow Crunch Cash Flow Statement & Income Projections Courtesy of BizHelp24 Cash Flow Management The purpose of a 'Cash Flow Forecast' is to provide the business owner with projected figures (usually over a 12 month period) that are calculated to ensure (as a minimum) the survivability of the company, and ultimately the achievement of a planned and profitable target. In the basic sense, cash flows into a company (through sales) and flows out (through expenses). Courtesy of BizBasicsOnline Creating A Cash Flow Projection No business plan is complete without a cash flow projection. It is vital to plan and project the flow of cash into and out of your new business by month for at least 12 months. A cash flow projection: Demonstrates to your potential lender that you will be able to pay back your loan Helps you to determine if your pricing is high enough to cover all of your costs (including loan costs) Allows you to determine if you have the correct number of staff and equipment for the business that you forecast Shows you exactly how much you need to borrow (and when) Demonstrates that your business idea is viable Helps you identify all of your expenses There are five steps to creating a cash flow projection: Estimate sales by month. Identify all items that you have to pay for and when. Identify all sources of cash (and timing). Combine all information on one worksheet. State your assumptions. Courtesy Of MindTools Cash Flow Forecasting With Spreadsheet Forecasting the Viability of a Financial Decisions and Investigating the Impact of Changing Factors. By carrying out a Cash Flow forecast with a spreadsheet package (software) you can investigate the impact of changing factors within the forecast. If you have structured the spreadsheet correctly then you will be able to see, more or less instantly, the effect that changes will have. Courtesy of Small Business & Technology Development Center Cash Flow Spreadsheets Underlying your narrative plan documents are the financials. The financial picture is your ultimate reality check. Can your business dream generate income and achieve your financial goals? Several cash analysis spreadsheets are included for your use from blank forms for your input to examples of completed financial plan documents. Business Plans Budgets and Cash Forecasts are included as a part of Business Plans; however, the Business Plan includes much more than just these two analyses. Some of the additional information presented includes information about and qualifications of the owners and key management, marketing and sales information, descriptions of products and/or services offered, prior year actual financial information (non-startup businesses), and more. A good analogy for a Business Plan is an individual's resume. A Business Plan can be thought of as a resume for your business. Courtesy of Kaye Vivian, ABC Business Plans Short Course A Short Course in Business Plan Writing If this is your first time to write a business plan, don't be overwhelmed! It's quite comprehensive, and you are going to have to do a lot of hard work and digging. And it's stressful and overwhelming, because you won't easily have the answers. You will have to discuss rationally a lot of things that you know intuitively you will do once you need to. Here are outlines to two approaches that can help you, as well as some things she learned in the trenches. Courtesy of Sample-Business-Plan Organization More Sample Business Plans Provides additional information and help for preparing a business plan. Courtesy of Businessplans.org Business Plans Competition Samples of plans entered in competition and selected as examples of what makes a good business plan. Courtesy of Accelerated Planning Technique Accelerated Planning Technique An online training course that will help you visualize business planning in a new way--object oriented thinking. There is a lot of good material here, if you take the time to work through it. Courtesy of BizPlan It Business Plans by BizPlan It BizPlanIt is a leading business plan consulting firm that is also committed to providing high-quality free business plan resources for the do-it-yourself business plan writer. If you're searching for business planning tips, tools and advice from experts who have prepared hundreds of business plans - they have the right site. BizPlanIt's Virtual Business Plan is a free online business plan resource based on real-world business planning advice. It's packed with over 100 pages of tips, insights and examples, organized into the major sections of a full-length business plan. Courtesy of SoYouWanna Learn About Business Planning Maybe if you ask really nicely, a really rich person would give you tons of money so that you can start your own business. Yup. And while you're visiting Fantasyland, you might as well ask for a piece of moon cheese. No one, we repeat, no one will give you money if they think it's going to tank. So you have to convince 'em that your business is going to be a rousing success. That's where a business plan comes in. Courtesy of SBA Business Plan Basics - SBA A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals. Courtesy of ABCSmallBiz Business Planning Many people get discouraged when they consider business planning activities. Doing it right involves work and takes time away from your other tasks. A lot of people can't find the time to do it in one burst of activity. For that reason, they break their business plan tutorial into nine sections so that you can pace yourself and make reasonable progress while still taking care of everything else you do. Topics covered: Product or Service and Business Description Know Your Customers Market Research Competitive Analysis Financial Projections Management: Acquiring the team you need. Marketing Plan Exit Strategies Executive Summary Courtesy of CCH What Can a Business Plan Do for You? Many people think that the only reason to develop a business plan is to convince potential lenders or investors to provide financial backing. This view is a little short-sighted, however. A well-developed plan can serve as one of your most important management tools. A good plan will provide a blueprint and step-by-step instructions on how to translate your idea into a profitably marketed service or product. Writing Your Business Plan After you've considered the purpose of your plan and done some background preparation, it's time to consider the actual elements that you'll include in the written document. A business plan customarily has a number of major elements or sections. Each of these elements serves a particular purpose in the overall presentation of your plan. The following list identifies and briefly describes each of the documents or document categories that will make up your plan. They are presented in the order in which they usually appear in the plan. But don't feel constrained to follow this exact format if another way makes more sense because of the nature of your business. For example, the financial portion of a plan for a business with a 20-year track record is much more important (and comprehensive) than the financial portion of a startup business's plan. Business Plan Case Studies Every business plan should capture the unique characteristics of the business and the people who will run it. What sets your business apart from its competitors? While we have provided a list of the documents that should be included in a business plan, the presentation of the recommended information is, to a large extent, a matter of personal preference. Courtesy of BuzGate Why Plan ? Written By:Dr. William R. Osgood Discover how planning for your business success can minimize risk and maximize outcomes. Why should you go to the trouble of creating a written business plan? There are at least three major reasons: The process of constructing a business plan, including the thought you put in before beginning to write it, forces you to take an objective look at your business project in its entirety. The finished product, your business plan, is an operating tool which, properly used, will help you manage your business and work toward its success. The completed business plan communicates your ideas to others and provides the basis for your financing proposal. Courtesy of Taguspark Provides a tutorial (Business Plan Tutorial) and a tool (Business Plan Tool) to help you in building your own Business Plan. Here you find a Basic approach (with a case study) as well as an Advanced approach (with an interactive tool to help you in building different versions of your Business Plan). Check out the read me first button to see what good "stuff" this site provides. Basic Business Plan Sample Business Plan & Case Study Advanced Business Plan Build Your Own Business Plan Requires free registration but a great tool to get you started developing your business plan. Courtesy of BankRate Business Planning: Introduction Even if the most writing you've ever done is a letter to your grandmother, you can put together a business plan these days. There is a lot of help available. Call your local bank and they'll tell you exactly what they look for in a plan. Lots of free assistance can be found by calling Small Business Development Centers, local business incubators, Service Corps of Retired Executives volunteers or by contacting the Small Business Administration. Ebook-Courtesy of SmallBusinessTown Writing a Business Plan Requires Adobe Reader-PDF Good reference for preparing a Business Plan. Discusses: What is a Business Plan ? Why Write a Business Plan ? The "5 Essential Elements" of a Business Plan Courtesy of BizBasicsOnline Basic Business Plan Outline Main Sections of a Business Plan Executive Summary Background Marketing A. Description of Product/Service B. Target Market C. Competition D. Pricing E. Advertising/Selling F. Sales Forecast Operations/Production Process Location Human Resources Future Financial Information A. Cash Flow Projection B. Income Statement C. Balance Sheet Supporting Documents Courtesy of Inc Build a Strong Business Plan Though many successful companies have been started without the benefit of a formal business plan , it can be an essential factor in the birth and growth of your company. A good business plan will help you obtain financing, arrange strategic alliances, attract key employees, and boost your confidence. It sells your company to the world and gives you direction as the world answers back. From the table of contents to the financial tables, a business plan covers a lot of ground. How can you make your executive summary stand out? How much detail is appropriate when outlining your marketing strategy? What is the best way to present the financial projections? Inc.com provides good resources to help you create each part of your business plan. Courtesy of American Express Creating an Effective Business Plan American Express has broken the typical business plan into seven key elements. For each and every element they provide a description, instructions for creation, tips for avoiding common pitfalls, and "Toolboxes" full of samples, worksheets, and glossaries that will clarify and walk you through the process. Courtesy of BankRate Introduction to Business Planning Don't make the mistake of going nowhere with your new company. Map out your goals and objectives with a business plan. Not only will you be serving yourself with positive direction, your attention to detail will make your business more attractive to lenders and investors. Courtesy of BizHelp24 Business Plan Here you will find a working business plan example which will help you create your very own. Remember, software is available to help you create your own business plan. Courtesy of BusinessPlans Example Business Plans Includes 29 sample business plans from the University of Texas. Each business plan was a winner or finalist in the Moot Corp® Competition. The judges (venture capitalists) selected these plans as representing the best in business strategy and presentation. Check out the whole BusinessPlans site for more related information. Courtesy of Buzgate The Business Planning Format/Outline The information and ideas collected during a business planning process take a particular form when organized into a formal business plan. The material should be organized in a rational order so that it leads the reader from point to point and then to a logical conclusion Courtesy of LearnThat Business Plan Outline Provides an outline to help the entrepreneur assemble the facts that are essential to good business planning. Complete your business plan using the accompanying outline to ensure that the necessary details are included. Keep in mind that thoroughness, clarity, and rationality of the plan are all factors that will play key roles in successfully financing, starting, and operating your business. Courtesy of RBC (Royal Bank of Canada) Business Plans Planning Guide A step-by-step guide on how to write a business plan, with tips on writing the introductory letter, coverpage, table of contents, executive summary, information about your management team and ownership structure, professional support services, human resource requirements, business summary and history, industry overview, your position in the industry, your target market, what makes your product or service unique, pricing strategy, sales and distribution plan, advertising and promotions plan, the operations section, your business expenses, income statement, cash flow statement, balance sheet, risks and more . Budgeting, Planning & Cash Management Tools Templates and Models Free Business Plan Templates & Financial Plan Models Courtesy of Innovateurs.com PlanWare is an excellent site that provides a free Business Plan Guide & Template-Free-Plan and a 6 month Business Financial Planner-Exl-Plan and 6 month Cash Forecast-Cash Planner. Free-Plan is a Microsoft Word document and Exl-Plan and Cash-Plan are a Microsoft Excel templates. Their site also has some excllent checklists and guides and free on-line business tools. Business Plan Pro The best way to show bankers, venture capitalists, and angel investors that you are worthy of financial support is to show them a great business plan. Make sure that your plan is clear, focused and realistic. Business Productivity Software. More excellent software for business planning, budgeting and marketing ! BizPlanBuilder®, MarketingBuilder®, Sample Contracts... PWC Financial Template If you're looking for an Excel Financial Planning template, I suggest you try the PriceWaterhouseCoopers (PWC) excel financial template. It's free and PWC is a prestigious world wide public accounting firm. You will need to provide them some general information about yourself or your company to download the template. Nothing that you should be concerned about and they do respect your privacy. Excel Business Plan Template Jaxworks provides instructions and an Excel Business Plan Template to aid you in creating your Business Plan. Spreadware Quickly and easily set-up, generate and analyze pro forma (projected) financial statements for up to ten years. With this program a user can forecast and evaluate a company's financial condition, estimate financing requirements, track cash-flow sources and uses, perform what if? analyses on alternative courses of action and provide a standard for evaluation of actual performance. Automated consolidation, debt schedules, fixed asset schedules, rules based credit line, instant histograms and more make this program our most popular tool. (Also used extensively as a budgeting/forecasting tool.) Return To Bookkeeping and Accounting Tutorials