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Running Through the Numbers
The last element of your plan—and one of the most important—is your financials. This is where your numbers back up what you've been saying with words. The financials tell the reader when your business will turn profitable and how much money you'll need to reach that point.
Your financial plan should show revenue (your sales), expenses, cash flow (how fast you're burning money), your breakeven point (when you stop burning money and turn a profit), and, most importantly, the financial assumptions on which you based your business plan. It also should include a section on how you plan to use the money you raise from investors. This is called use of funds.
Although most financials go out three to five years (and in Internet time, that's an eternity), they still are useful to track your assumptions and see how accurate they are after you open for business. As your numbers come in during the first few months to a year, you can review and revise your projections to get a more accurate reading on your first set of assumptions, changing them when necessary.
Remember this: Your business plan is a roadmap, not a destination. It will change over time with your business. Count on it. After the business plan is complete, don't just file it away and forget about it. Update it regularly. Think of it as a process of constant corporate self-appraisal. Accessing your business goals, strategies, and objectives by updating your business plan on a regular basis will keep your positioning fresh, your competitors at bay, and your business open to new and profitable opportunities.