Are you preparing your business plan in Excel? Microsoft Excel is a versatile financial modeling tool if you're skilled at building tables that cross-reference each other and can be updated automatically as you make changes. The critical component is structuring the tables with driver tabs so that changes to your start-up expenses, sales lines, expenses, or personnel forecast “flow through†to all other tables in the pro forma, including the balance sheet, your cash flow, and the monthly tables for Year 1, typically included in an appendix to the business plan itself. Excel is not essential for the business plan financials; you can accomplish the same objective using another method – including software – but the labor required to double-check your outputs, especially if they change, can feel like more trouble than it's worth. The risk of errors in your financial model, which can spell doom at the bank or VC's office, should be all the reason you need to ensure that your financial model is built correctly the first time.
The financial model, once complete, should show all of the following components:
• Past Performance (for existing businesses)
• Start-up Summary (for new businesses)
• Use of Funds/Investment Proceeds
• Sales Forecast
• Profit & Loss
• Cash Flow
• Balance Sheet
• Break-Even Analysis (where applicable)
• Year 1 Financials by Month
Other considerations include a sensitivity analysis showing the effect of a variance in sales (usually 10-15%), a financial indicators table that shows core metrics for investors, an ROI calculation for capital partners, and an assumptions table. MasterPlans has built the industry's leading financial model in Excel and provides this file – completed and fact-checked – to every paying client at the end of the business plan engagement. If you have questions, need assistance, or simply want to outsource the entire process of building a business plan in Excel, MasterPlans has you covered. We've built financial models for almost 8,000 different clients (startups and existing businesses) since 2002 and we can get you squared away too. Call 877-453-2011 to speak with a consultant.
