The investor will be interested in forecasts of profits and cash flow incorporating the proposals detailed elsewhere in the plan.

In addition, the amount and form of finance sought as well as a schedule for its repayment should be set out. Investors in start up companies will want to see evidence of commitment on your part.

Recommendations

• Demonstrate the careful thought the financial projections have been given;
• document your assumptions explicitly - include a commentary on the financial projections; and
• do not include too many spreadsheets - computer produced analyses will be helpful in preparing and evaluating financial forecasts but the statements included in your plan should be clear and to the point.

Key elements

Financial projections:

• prepare projected income statements, balance sheets and cashflow statements for the next three to five years (on a monthly basis for at least the first two years);
• details of assumptions made in preparing the projections;
• the impact of capital expenditure and fixed costs on the cash flow;
• break even/sensitivity analysis, identifying the split between fixed and variable costs; and
• a contingency element, identified as such.