Describe the financial section of a business plan.

Financial Section of a business plan;
Basically, the financial section of the business plan consists of three financial statements,
The income statement,
The Income Statement is one of the three financial statements that you need to include in the Financial Plan section of the business plan.
The Income Statement shows your Revenues, Expenses, and Profit for a particular period. It’s a snapshot of your business that shows whether or not your business is profitable at that point in time; Revenue – Expenses = Profit/Loss
The cash flow projection
The Cash Flow Projection shows how cash is expected to flow in and out of your business. For you, it’s an important tool for cash flow management, letting you know when your expenditures are too high or when you might want to arrange short term investments to deal with a cash flow surplus. As part of your business plan, a Cash Flow Projection will give you a much better idea of how much capital investment your business idea needs.
For a bank loans officer, the Cash Flow Projection offers evidence that your business is a good credit risk and that there will be enough cash on hand to make your business a good candidate for a line of credit or short term loan.
Do not confuse a Cash Flow Projection with a Cash Flow Statement. The Cash Flow Statement shows how cash has flowed in and out of your business. In other words, it describes the cash flow that has occurred in the past. The Cash Flow Projection shows the cash that is anticipated to be generated or expended over a chosen period of time in the future.
While both types of Cash Flow reports are important business decision-making tools for businesses, we’re only concerned with the Cash Flow Projection in the business plan. You will want to show Cash Flow Projections for each month over a one year period as part of the Financial Plan portion of your business plan.
There are three parts to the Cash Flow Projection. The first part details your Cash Revenues. Enter your estimated sales figures for each month. Remember that these are Cash Revenues; you will only enter the sales that are collectible in cash during the specific month you are dealing with.
The second part is your Cash Outgoing/Disbursements. Take the various expense categories from your ledger and list the cash expenditures you actually expect to pay that month for each month.
The third part of the Cash Flow Projection is the Reconciliation of Cash Revenues to Cash Disbursements. As the word “reconciliation” suggests, this section starts with an opening balance which is the carryover from the previous month’s operations. The current month’s Revenues are added to this balance; the current month’s Disbursements are subtracted, and the adjusted cash flow balance is carried over to the next month.
The main danger when putting together a Cash Flow Projection is being over optimistic about your projected sales.
The balance sheet
A balance sheet is a snapshot of a business’s financial condition at a specific moment in time, usually at the close of an accounting period.
A balance sheet comprises assets, liabilities, and owners’ or stockholders’ equity. Assets and liabilities are divided into short- and long-term obligations including cash accounts such as checking, money market, or government securities. At any given time, assets must equal liabilities plus owners’ equity. An asset is anything the business owns that has monetary value. Liabilities are the claims of creditors against the assets of the business.
Where to begin;
Start off to think of your business expenses as broken into two categories; your start up expenses and your operating expenses.
All the costs of getting your business up and running go into the start up expenses category. These business expenses may include:
business registration fees
business licensing and permits
starting inventory
rent deposits
down payments on property
down payments on equipment
utility set up fees
This is just a sampling of start up expenses; your own list will probably expand as soon as you start writing them down.
Operating expenses are the costs of keeping your business running. Think of these as the things you’re going to have to pay each month. Your list of operating expenses may include:
salaries (yours and staff salaries)
rent or mortage payments
telecommunications
utlities
raw materials
storage
distribution
promotion
loan payments
office supplies
maintenance
Multiply this number by 6, and you have a six month estimate of your operating expenses. Then add this to the total of your start up expenses list, and you’ll have a ballpark figure for your complete start up costs.