By Ezra Julia
Reston, VA, is a state in the USA that provides a home to many small and mid-sized businesses with its business-friendly environment. Every business starting with a well-defined plan in this city is seen to reach a successful end. This successful end is described as earning profits through sales for business owners, which is done using a financial plan.
So, if you want to make your business earn your desired profit, then consult with a CPA in Reston, VA, for the right guidance, and read the guide below to create a financial plan now.
Creating Financial Plan For Small Business: A Complete Guide –
- Start with a P/L statement.
You can start preparing your business’s financial plan with a profit and loss statement to understand your business’s profitability. This is an account holding all your business expenses and revenue to come up with the profit earned.
To do this, you will subtract your business’s expenses from its revenue to get a clear amount of money you earn from your current expenses or the cost of goods sold (COGS). By the end of this statement, you will understand your customer retention rate along with your sales and profit margin during a specific period. This will help you get a clear picture of your business’s financial position so you can move forward to the other important parts of the financial plan if this statement stays stable.
- Calculate operating and net income.
After making the profit and loss account, you should move towards understanding the actual profits you take from the profit your business made.
For this, you will subtract the operating expenses from your business’s gross profit before considering the interest and tax. Next, you can deduct the non-operating expenses, like taxes, interest, etc, from your operating income to get your net income. This will help you know the actual profitability of your business. This means the profit you make in a month is still required to cut off the rental expenses, travel expenses, etc.
Then, the state’s tax rules determine the tax deduction for the leftover amount. For example, the sales tax for Reston is 6%, so it will be deducted from the total profit to provide you with a clear profit amount.
- Make a cash flow statement.
Now, you can move forward to making a cash flow statement. This is essential to determine how and where the business money is going and coming. This will be utilized to understand the cash surplus, business liquidity, etc.
- Financial projections
Next, you make the financial projections for your business with your sales forecast. This will include the estimated cost required to reach the business goals and how you acquire them. During this part of your financial planning, you may need an accountant to understand the diverse scenarios possible in your business along with the needs of investors and stakeholders.
- Compare goals
Lastly, you will monitor the business transactions, cash flow statement, balance sheet, P&L account, etc. With this, you will compare your business’s actual performance with the planned financial planning to make stronger financial plans for the future.
