How to Write the Financial Analysis for Business Plan

Overview of the Financial Analysis Section of a Business Plan


The financial analysis section of your business plan should contain the data for financing your business now, what will be needed for future growth, and an estimation of your operating expenses.

Because of the structured, in-depth financial data required for this section, you should consult your accountant or other trusted and qualified financial professional before writing this section.

What Does the Financial Analysis of a Business Plan Include?

The financial analysis section should include the following and be based on estimates for new businesses or recent data for established businesses:

Balance Sheet: This should include your assumed and anticipated business financials, including assets, liabilities and equity.
Cash Flow Analysis: An overview of the cash you anticipate will be coming into your business based on sales forecasts, minus the anticipated cash expenses of running the business.
Profit and Loss Analysis: Your income statement that subtracts the costs of the business from the earnings over a specific period of time, typically a quarter or a year.
Break-Even Analysis: This analysis demonstrates the point where the cost of doing business
is fully covered by sales.
Personnel Expense Forecast: The expenses of your team, as outlined in the Management Summary section.


Tips for Writing the Financial Analysis Section of a Business Plan

The financial analysis section of your business plan may be the most challenging for you to complete on your own, but it could also be the deal-maker or deal-breaker when you are searching for funding. Here are some tips to help you out along the way.

Make Assumptions

We are taught to never assume, but how can you complete a financial analysis section for a business that hasn't been started yet? This is where you bend the no-assumptions rule a bit to provide data that accurately portrays what you anticipate will happen.
Go back to the other sections of your business plan and write down any financial assumptions you made while drafting those sections. You can then use those assumptions in your financial analysis section. The most important factor is ensuring that the data in the financial analysis section is consistent with the assumptions made in other sections of your business plan.


Get Help

There may be no section of your business plan where you need help as much as you do with your financial analysis section. The assumptions, forecasting and specific numbers can be complicated and generally difficult to wrap your head around, especially if you don’t have a financial background. This financial information, though, is exactly the data your audience will be looking for.

You can avoid the stress and uncertainty by getting help from a qualified financial professional early in the process.

Know the Ground Rules

When it comes to the financial analysis of your business plan, it will serve you well to have a basic idea of what each element should include, where the data comes from, and what the numbers mean. This stands even if you have help developing the financial analysis section, because you will be the one left to explain and expand on the financial data in face-to-face situations.

GAAP (generally accepted accounting principles), a collection of rules, procedures and conventions that define accepted accounting practice, should be followed throughout this section.

Use Visuals

Use graphs and charts in the financial analysis section to illustrate the financial data, just as you should in other sections of your business plan that include extensive data, numbers, statistics and trends. Put the most important visuals in the financial analysis, with the supporting graphics included in the Appendix.
Check Your Math

A quick way to lose the attention of a potential investor is by having flawed calculations or numbers that are not backed up. Double and triple check all of your calculations and figures, and have a third-party do the same to ensure everything adds up.You should also avoid including any figures that are not explained, backed up and otherwise researched extensively, especially when it comes to assumptions you've made. Use data from current and past markets and financial situations to substantiate your numbers.