The details about the financial implications of running the company should essentially be made available to the readers since it will help the investors and lenders know whether the company will be able to repay the loan on time or provide significant ROI on exit. For the internal purpose, financials helps the company to understand how much external funding is required when the levels of cash might come down and what sales and goals might be achieved to become financially viable. The following are the important subsections to include:
- • Revenue model: This section will detail how the company will generate its revenue. It can be either straightforward in case you sell products or sometimes be a little complex too, such as if the company is selling subscriptions or if the company is dealing in multiple products or services.
- • Financial Highlights: A business plan should mandatorily have a detailed financial forecast including five years Projected Income Statement, Projected Balance sheet and Projected Cashflow Statement. The financial projection will reflect in the appendix, and highlights of the projections will go into the financial plan section. And these highlights include revenues, direct expenses, gross profit, other expenses, EBITDA and net income projections.
- • Funding requirements/use of funds: This section will detail the outside fund requirement of the company.Like how much funding might be required for various purposes such as product development, product marketing, staffing, rent/office building build-out etc.
- • Exit strategy: If the company is looking for equity capital, it should explain how the investors can ‘cash out’ or ‘exit’ from their investment. And to add credibility to the company’s exit strategy, thorough market research can be conducted and find out how other companies have exited from the market, amounts of exit etc.