Income statement
Also called the profit and loss statement, or P&L
- Shows
- Revenue, less the costs of earning it, leaving a net profit or loss.
- Covers
- A period of time, such as a month, a quarter or a year.
A business plan reference, entered line by line
Business plans for small business owners, from format to financial statements
Which plan format fits the reader you are writing for, what a template gives you and what it leaves blank, when plan software earns its fee, and the income statement, balance sheet and cash flow forecast that lenders and investors read most closely.
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No scores, no star ratings
Where one option suits better, it is said in words, with the reason.
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Figures carry their source
A number about plans, loans or tax is attributed to whoever published it.
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Templates and software named plainly
What a tool does, what it costs and what it leaves to you.
Plan formats
Four ways to set out a business plan
The right format depends on who will read the plan and what you need from them. A lender reading a loan file and a partner agreeing a direction want different documents.
| Folio | Format | What it is | Where it is used |
|---|---|---|---|
| 01 | Traditional planThe full written document | What it isA detailed plan in a standard order of sections, from the executive summary through market analysis and operations to multi-year financial projections and an appendix. | Where it is usedLoan applications and investors who ask for the whole picture in writing. It is also the version most templates are built around. |
| 02 | Lean planOften drawn as a business model canvas | What it isA short, high-level summary of the essentials: the value offered, the customers, how they are reached, the main costs and how money comes in. | Where it is usedTesting an idea quickly and keeping a plan current as the business changes. Lenders usually want more detail than this. |
| 03 | One-page planA single sheet | What it isThe goals, the market, the offer and the key numbers condensed onto one page. | Where it is usedAgreeing direction with a partner or team, and as a first draft before a longer plan is written. |
| 04 | Pitch deckSlides, not a plan | What it isA short presentation of the problem, the solution, the market, the team, the traction so far and the amount being raised. | Where it is usedMeetings with investors. A deck summarises a plan and its financial model; it does not replace them. |
The traditional plan
A traditional plan, section by section
Most traditional plans follow this order. Keeping to it means a lender finds the funding request and the projections where they expect to.
- 01
Executive summary
What the business is, what it needs and why it will work. Usually written last, read first.
- 02
Company description
The problem the business solves, who it serves and what sets it apart.
- 03
Market analysis
The industry, the target customer, the size of the market and the competitors already in it.
- 04
Organisation and management
The legal structure, who owns the business and who runs each part of it.
- 05
Products or services
What is sold, how it is made or delivered, and what it costs to provide.
- 06
Marketing and sales
How customers will hear about the business and how a sale actually happens.
- 07
Funding request
How much money is needed, over what period, and what it will be spent on.
- 08
Financial projections
Forecast income statements, balance sheets and cash flow, with the assumptions behind them.
- 09
Appendix
Supporting documents: credit histories, licences, leases, contracts, resumes and similar.
The financials
The financial statements a plan needs
Three statements carry the numbers in almost every plan, and a break-even calculation usually sits beside them. Each answers a different question about the same business.
Balance sheet
Also called the statement of financial position
- Shows
- What the business owns, what it owes, and the owners’ stake in it.
- Covers
- A single date. It is a snapshot rather than a running total.
Cash flow statement
Often forecast month by month in a plan
- Shows
- Cash coming in and going out, from operating, investing and financing activity.
- Covers
- A period of time. A business can be profitable on paper and still run out of cash.
Break-even analysis
Not a statement, but most plans include one
- Shows
- The level of sales at which revenue covers fixed and variable costs.
- Worked as
- Fixed costs divided by the margin each sale contributes after its variable costs.
Assets = Liabilities + Owners’ equity
The identity every balance sheet rests on. If a projected balance sheet does not balance, an assumption somewhere in the forecast is wrong.
Open questions
Questions a plan has to settle
The questions small business owners ask about formats, templates, software and the numbers, set out in the order a plan usually meets them.
Choosing a format
- Which format does a bank loan application call for, and which does a pitch to investors?
- How long should a small business plan be?
- When is a lean plan enough on its own?
Working from a template
- What should a template already include before you start filling it in?
- Which parts of a plan can a template not supply for you?
- Is a free template from a lender or a government agency enough?
Business plan software
- What does plan software do that a word processor and a spreadsheet do not?
- Is it worth paying for if you are writing one plan, once?
- Can the financial forecasts it produces be exported and checked by an accountant?
The financials
- How many years of projections does a plan need?
- What assumptions should sit behind a sales forecast?
- How is a startup with no trading history expected to show its numbers?