As identified previously, a financial statement is essential to include in a business plan so that investors understand the needs of a start-up company in terms of both future and present costs. Usually, a cash flow statement is included in a business plan for considering how cash flow can affect the growth of a company. However, it is important to underline that financial data should be as closer to the truth as possible by considering all variables and avoiding rushing to any conclusions. Thus, when performing financial analysis, business planners should make reasonable assumptions and state them appropriately. This is necessary for showing the impact that financial information will have on identifying an organization’s financial position.
Presenting accurate financial information is important because objectivity and honesty are qualities by which investors will measure the potential of a business. As long as financial data is reported correctly in a business plan, investors will determine whether they are ready to support a company or not. It is also important to mention that accurate financial data may indicate any concerns about the potential business capabilities. Therefore, by including relevant and accurate information regarding a young company’s operations, prospective investors or creditors will know where their money will go if they decide to support a company financially. Overall, it can be concluded that when a business plan includes accurate financial information, it provides the target audience with an idea about how their invested resources will be used to gain a competitive advantage and ensure success.
