1. SC3 – Business Planning (E)
Lim Sei cK

2. All about $$$
FINANCIAL ANALYSIS
FINANCIAL FORECAST

3. Financial Projections
Summary of the cash flow and trading forecasts.
This section of your business plan should highlight the key assumptions that have been made, and
also outline the main risks and opportunities in the forecasts. (i.e. what might go wrong, or where things might prove better than forecast)

4. Financial Analysis and Forecast
Start up costs
Sales forecast
Forecasted Profit and Loss
Cash flow forecast
Balance sheet
Break-even analysis

5. Startup Costs CAPITAL: money that was put in by the owner
LIABILITY: money put in by banker / investor to be paid back
ASSETS: property that can be turned to cash
EXPENSES: purchases or payments that cannot be redeemed for cash
INCOME: Money coming in from business operations or sales

6. Profit and loss account – showing how the business has traded for a specific period.
Balance sheet – a statement of the assets and liabilities of a business at a particular time, and how those assets and liabilities have been financed.
Cash flow statement – a statement showing how cash has come into the business and what it has been spent on.

7. Cash flow
Cash flow describes the movements of cash into and out of a business
When you look at the bank statement of any business, you soon realize that cash flow is a dynamic and often unpredictable part of business life. 

8. You need to be able to distinguish between:
Cash inflows:
movements of cash into a business
Cash outflows:
movements of cash out of the business

9. The difference between the cash inflows and cash outflows during a specific period (e.g. a week, month) is known as the “net cash flow”.

10. An example of a simple cash flow forecast is shown below
$000
JAN
FEB
MAR
APRIL
MAY
JUNE
Cash at start of month 25 B 15 5 10 20
Cash inflows D
Cash outflows 30 C
Net cash flow A -5
-10 F
Cash at the end of month E

11. An example of a simple cash flow forecast is shown below
$000
JAN
FEB
MAR
APRIL
MAY
JUNE
Cash at start of month 25 20 15 5 10
Cash inflows
Cash outflows 30
Net cash flow -5
-10
Cash at the end of month

12. So in business, “cash is king”. 
Cash flow is the life-blood of all businesses – particularly start-ups and small enterprises.
As a result, it is essential that management forecast (predict) what is going to happen to cash flow to make sure the business has enough to survive.

13. Time to complete the final picture!
Your financial plan:
- capital?
- total expenses?
- total sales?
- costs (management, operational, marketing, financial, etc)?
- forecasted cash flow statement?