Explain the role of the financial section of the business plan, including where the information comes from, who the primary audience is, and what internal planning function this section serves.
What will be an ideal response?
Role: Determines the potential investment commitment needed for the new venture and indicates whether the business plan is economically feasible. Includes:
? Forecasted sales, cost of goods sold, general and administrative expenses and estimated income taxes for 3 years.
? Cash flow estimates for 3 years provided monthly taking into account sales patterns and bill payments.
? Projected balance sheet including current financial condition of company – assets, liabilities, retained earnings (cumulative losses).
Audience: potential investors
Internal Planning Function: shows the necessary financial commitment needed as well as the monetary expectations of the firm when launching this new part of the venture. Helps set sales goals and definitions of success.
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What will be an ideal response?