Answer: A financial plan is a roadmap or compass that gets you from one financial period (1/1/xx) to another (12/31/xx). It defines what revenue you will generate. In other words, what will your projected sales be and break down the sales by category? For example in our business, we project sales for training programs, measurement projects, consulting assignments and product sales. Four sources of income. Your financial plan will also assign expenses needed to generate those sales. Many times they are called operating expenses or “sales and general administrative expenses.” They include rent, auto, insurance, payroll and taxes, office/administrative, such as stationery, copy paper, printer cartridges and promotional expenses like radio, newspaper advertising, trade press advertising, trade shows and your sales force. A financial plan will also include the need for capital equipment (printers or fork trucks). A projection should also be done for a balance sheet to show assets, liabilities and equity. When I started my business, my father gave me a plaque that reads, “Happiness is Positive Cash Flow,” so you will want to do a source and use of funds or a cash flow statement, which will end up in a “break-even” analysis. This will enable you to know what is the size of the “nut” you will have to cover in starting your business and then financing it.
Source: Simple Steps for Starting Your Own Business – SCORE/BoA