Lesson 6: Show me the money

In today’s lesson, you’ll examine the essential financial points to include in this section of your business plan.

So you’re ready to seek a business loan from a bank, seek capital from a wealthy individual and or invite a business partner to join forces.

They’ll want to know the financial health of your business right now, see your statements and view your forecasts. They’ll also need to know how much money you’re after and what you plan to do with it, so this information is a non-negotiable part of your business plan.

But most of all, putting effort into this section is really for your own benefit–so you can understand how you see your business growing.

You may be thinking: “I’m not great with money. Isn’t it my accountant's job to know all of this?”. Don't worry! We’re here to encourage you to upskill so you’re fully aware of what’s happening in your business financials. Let's pay attention to what you need to know for this section.

While it may not be your strong point, we promise that by the end of this lesson, you’ll have a good sense of where you stand currently, plus:

  • What your financial goals are
  • What a profit and loss statement is
  • What’s a cash flow statement
  • How to ask for capital from a bank 
  • What investors are looking for 
  • And much more! 

It’s also a good idea to speak to an expert like an accountant or bookkeeper about your finances – you can find an MYOB-certified bookkeeper here.

Plan your finances

Money is the only way you'll keep your business afloat. If you spend more than you make, you'll be shutting up shop before you know it. The best way to avoid this is to get a clear idea of three financial areas: starting costs, operating costs and future projections.

Starting costs

What does it cost to set up your business? Let's look at Kelly’s costs as an example. 

  • Website set up
  • Hosting
  • Design
  • Inventory
  • Rent for the first six months
  • Market stall tables, tent and decorations 

Always take the time to write down everything you'll need to pay for. Tools, licences, permits, equipment, bond, rent, insurance and more. 

Operating costs

Think about what the costs are to keep your business doors open. How much is your accounting software each month? Website subscriptions? Hosting plan? Do you need other software to make your business more efficient? Are there any ongoing costs for keeping up with regulations for baking? Does she need to use a registered commercial kitchen? If so, how much are those fees per month?

Some of Kelly's operating costs include:

  • Wages for her and her partner
  • Electricity
  • Internet
  • Cleaning 

Future projections

By keeping a rainy day fund for unexpected costs, any revenue surprises will be taken into account instead of emptying your bank account. Think forecasting as less tax reporting and more an elaborated guess. 

Before you talk to the banks 

It’s helpful to start with answering these key questions before you start asking for finance. These are just some of the comprehensive things banks will want to know when you're trying for a loan:

  • Why your business needs a loan
  • Information on how much you want to borrow
  • For how long do you want a loan 
  • When the loan will be repaid 
  • What collateral can be offered to secure the loan?

How financially savvy are you right now? 

  • What are your current businesses financial goals? In three years? Five years? 
  • How do you rate your knowledge out of 10 of the essential financial statements and forecasts you need to start or grow my business?
  • Can you produce a profit and loss statement? 
  • How about a balance sheet? 
  • What does your current cash flow statement look like? 

Activity 1: Spend 10 minutes answering these questions, honestly.

If some of those questions have stumped you in your tracks, don’t worry. We’re here to help! Jump on a call and chat with our helpful advisors. 

Activity 2: Your five key financial ratios

A basic understanding of terminology about financial ratios is the first step to writing your financial plan. Especially understanding and nutting out the five key financial ratios.

Activity 3: Key questions

Goal digger 

Working out what your financial goals are can actually be quite fun. Even if you’re not experienced in small business financial management, the formula is pretty simple. 

Step 1: Set your profit targets based on how much money you want coming into your business. 

Step 2: Figure out how many sales you need to make in that period of time and set your sales goals. 

Let’s take a look at Kelly’s financial section: 

Kelly looks at her expenses and operating costs and decides she wants to aim for making a $x profit over the next 6-12 months. By looking at how many items she’ll need to sell to reach that goal, she comes up with her 6-12 month sales goal of $ x.  

I want money, that’s what I want

Understanding who your investors might be is the first step in recognising what to include in your plan. Are they professional venture capitalists? Banks? Or wealthy individuals? 

Each type of investor will need a plan that’s nuanced and tailored to answer their specific questions. For example, in order to be a serious contender for capital, the bank lenders need to see you’ve done your due diligence by showing them detailed statements that include: 

  • A balance sheet forecast
  • A profit and loss forecast
  • A cash flow analysis 
  • A break-even analysis

As well as how long you expect to pay back the loan, what equity you’re able to put up (more on these later). Potential business partners may want to see the financial projections, a cash-out exit strategy and that you've done your due research and preparation.

What do investors look for? 

An investor's main considerations are cashing out. They’ll want to see how to get in and how to get out. They’ll mostly want to cash out with a large capital appreciation, so make sure you use this section to answer these questions: 

  • Do you expect to go public? Sell the company? 
  • What are the projections for investors 3-7 years? 
  • Will the businesses proceeds give investors a return on investment (ROI) capital between 35-60% risk range, compounded and adjusted for inflation? 

What’s the main way investors profit? 

The main way they profit from small, fast-growing companies is by selling their holdings. They don’t rely on cash from dividends. They sell their shares when the company goes public or is sold to another business. Venture capital firms generally want to cash out of their financial investments in small companies with 3-7 years.

Besides future projections, you will want to include your financial history and current financial ratios that show your overall financial health. If your business will operate at a loss to begin with, make this clear, and add a profitable year plan as an example.

Common financial terms


Revenue refers to any income made by your business. Be clear on how revenue will come into your business. Key financial figures include projected revenues, expenses and net income over the next five years. If you sell products or services, you can also include the highlights of breakeven analysis to demonstrate the sales volumes required to reach profitability. 

What’s a balance sheet? 

A balance sheet shows the assets, liabilities and capital of your business. 

What’s a profit and loss statement? (AKA income statement) 

A profit and loss statement summarises your businesses revenue, costs and outgoings over a period of time. 

What’s a cash flow statement? 

According to dummies.com:  A cash flow statement shows how money flowed in and out of your business over a certain time period and how assets of your business changed as a result. 

Still need more help? Speak to our team of advisors! 

Do I need to include print outs? 

The complete documents don’t need to be included in the finance section. They’re left for the appendix. But, more on this in tomorrow’s lesson.

Historical and projected financial statements?

Include a summary of your past and projected future finances here, but leave the complete documents for the appendix. 

Revisit your budget as you write

This business plan isn't a fixed thing: it's a living document that you can expect will change as your business changes. As you start to write your business plan, you might also discover new areas of your business you hadn't budgeted for. It's a great idea to revisit your budgets regularly and refresh your calculations as you go. 


In the next lesson

We'll take you through writing a killer executive summary, what to include in your appendix and how to present your unique business plan. By the end of the next lesson, you’ll be able to write an attention-grabbing executive summary that piques the reader’s interest, know what statements you need in your appendix and learn how to lay it out.

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