102 | HOW TO WRITE A BUSINESS PLAN
QUiCK PLAN
If you’ve chosen the quick plan
method to prepare a business plan (see
Introduction), you need to read and complete
the section “Complete Your Profit and Loss
Forecast,” below.
If you have any difficulties completing your
Profit and Loss Forecast, go back to Chapter
3 and read the section entitled “Break-Even
Analysis: Will Your Business Make Money?”
before completing this step. If you’ve chosen
a quick plan, you should be able to complete
this step easily.
Introduction
Your next job is to forecast how much
money you’ll need. You can’t make
realistic financial projections in a vacuum;
they must be integrated into a thought-
through plan. As a result, you’ll need to
make a number of decisions about how
your business will operate and forecasts
of financial results. But don’t let this
intimidate you. You’ve probably been
thinking about the financial side of your
business for some time. You will inevitably
need to make some assumptions and even
a guess or two. Of course, you should
make your projections as accurate as
possible; shoot for an accuracy rate of plus
or minus 10%.
TiP
Project development note: If you plan
to do a project development, skip the rest of
this chapter and go on to Chapter 7. Then turn
to Appendix C, where you will find a project
development example.As you begin dealing with all the details
inherent in financial projections, it is easy
to lose perspective and forget the larger
picture—that is, what all your work is
supposed to prove. If this happens, pause
for a moment and remember that, for
yourself and your potential backers, you’re
simply figuring out:
• how much money you need
• what you will spend it on, and
• how you will pay it back.What Is a Profit and Loss Forecast?
A profit and loss forecast is a projection
of how much you will sell and how
much profit you will make. This is the
foundation of your business plan. It gives
you and your potential backers the basic
information necessary to decide whether
your business will succeed. Basically,
a profit and loss forecast forces you to
estimate how many dollars you will take in
and how many dollars you will spend for
some future period. While other extremely
important factors affect your business, such
as your cash flow (Chapter 7), you’ll be in
good shape if you can confidently predict