A Financial Plan Versus a Business Plan

Financial Plan

Be sure when you engage someone to write your business plan that you are going to receive a full business plan and not just a financial plan.   A financial plan is key to the overall business plan but is not something that can really be done accurately until you have done due diligence on your overall business plan which includes:  market analysis, company direction and history, have an understanding of your products/services, product strategy, pricing strategy, promotional strategy, sales strategy, operational strategy, and an overview of your management and personnel. The business plan outlines how you intend to generate and spend cash, the financial plan focuses just on just the results. I guess I really didn’t know until recently that at times there was confusion by some business owners of what they were asking for until I started working with a few professional accountants.  Many clients approach their external accountant and ask for a business plan.   A professional accountant can provide you with the financials for your plan, but in most cases, they usually do not write all of the pieces that are associated with your business as they are external to your business.   They will, in fact, need all the information from all of the other pieces of your business in order to provide you with the best and most accurate financial outlook.

Prior to going out on my own, I was used to working with the CFO in small businesses on a business plan and I myself assumed that most external accountants wrote full business plans as well.   This was until l I was contacted by a professional accountant who was looking to write a business plan for a company that was looking to acquire another business.  He asked if I would work with him on the business plan to provide him with an understanding of what would be required from a sales and marketing perspective. The company was going to require new channels to be created and a separate business model from their current environment.  I would first work through what was required in that area and then  I would supply all of this information to him in order to do the financial piece.   In working with him and several other professionals, I understand they are approached by many of their clients wanting someone to write a business plan for their business without them having all of the pieces of the puzzle. A full business plan will be required if you are applying for grants/loans for a new business, are looking for investors, are looking to acquire a business, or are looking to be purchased.  You need more than just the financials and in order to an accurate assessment of your go-forward outlook, one will need to understand all of the parameters from the business that affect the financials.  The financials are there to support your business plan and are actually the final section of the business plan. If you are a current business that has a relationship with a financial institution or lender where your business is known or understood, a financial plan will definitely suffice.  For example, if you are just looking to expand your building or you are asking for funds that are not tied to the success of what you are doing in your business, you may not need a business plan. Hopefully, this will provide some help to people who are confused as to when they require and business plan or when they just need a financial plan. A business plan is a living document that you should update.  It is a road map of how you plan to operate your business. If you are looking for a full business plan, make sure the person helping you is coming in and spending time with you to assess and understand the pieces of your business and are asking you the right questions before they put pen to paper and are not just asking you for your financial statements and providing you with the required documents for a financial plan.

#financialplan #businessplan