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Addressing financing in your business plan

When you thought about starting a business here in South Carolina, you may have heard that a business plan is essential. It provides you with an outline of your company -- an outline of how the company will operate and goals you want to reach.

This sounds more like a tool just for you, and while it is, it does serve another important purpose. Your business plan lets others know what you intend for the future of your company. It shows how you plan to operate the company in a way that fosters success and helps it thrive. Why do others need to know this? If you want someone to lend you money, the lender needs to know you have a viable plan that allows for repayment.

If you need start-up cash, include a financial plan

You need a financial plan to understand the costs you face, to evaluate marketing tactics and to evaluate sales. Others need a financial plan for similar reasons. Moreover, if you attempt to solicit money without a clear understanding of what you need and what you need it for, no one will lend you money. Lenders and investors need to know that you aren't just "winging it" and hope to make a profit.

You should include the following in your financial plan at a minimum:

  • An income statement, or profit and loss statement, estimating income and expenses into the future
  • A sources and uses statement, indicating the amount of money your new business needs and where you expect it to come from

You also need to include numerous financial statements. Knowing what documentation to include is only the first step. You also need to know what to put in your income statement.

Not sure what goes into an income statement?

Your income statement should include every possible expense you expect the business to pay. The more you include, the better. Below are some expenses you may not realize you should include:

  • Bank fees, interest and charges that tend to add up quickly
  • Advertising and marketing expenses for events to promote your business
  • Small items such as decorations, coffee machines, office supplies and more

In addition, you should make sure to add in an amount for expenses you don't expect or can't foresee as you create your financial plan.

Your financial plan may need other documentation and details not listed above. In order to be thorough, you will need to sit down and analyze every aspect of your business to create a viable financial plan that could help you receive the money you need to make your entrepreneurial dreams a reality.

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