Projecting Success: How to Approach Your Financial Plan

Drafting a financial plan can be a daunting enterprise. While your vision may be the soul of your company—the thing that drives you, that inspires you—your financial plan is more like the circulatory system: detailed, concrete, steady—it’s not exactly the stuff of dreams, but without it, your business wouldn’t stand a chance. I’m Cory Williams and I know what it is like.

The dreaded financial plan is perhaps the most notorious part of the whole process of drawing up a business plan—and likewise, it may well be the most important. But rest assured, you don’t need an MBA from Wharton to put together a smart, solid financial plan. And once you have, you’ll be on rock-solid footing going forward.

When I was founding EPIC Health, what I really needed was a financial plan. Without it, the challenges I had to overcome may have won over my business plan. With my business and financial goals aligned, I can finally see my resilience pay off now as founder and CEO of my own company. Here are some tips to help you do the same:

Getting Started

A financial plan is a detailed breakdown of projected expenditures, profits, and losses. Unlike the financial report, which documents your company’s financial history so far, your financial plan is an analysis of your company going forward. It should show the monthly and yearly economic reality of your company as it grows into the future. But you don’t need a crystal ball to draw up a solid financial plan. You just need to know, in detail, your financial needs to reach well-researched margins of profit while also anticipating potential losses along the way.

Your financial plan can be a spreadsheet—which also indicates the nature of the document. The plan is all nuts and bolts, nitty-gritty, complex numbers founded on thorough and accurate research. It might sound daunting, but just approach it like it is to be written: one specific little step at a time, carefully, without getting bogged down by the big picture.

What’s it Even For?

Your financial plan will, of course, be a vital component of any attempts to draw in investors. It’s your company’s road map, after all, and one of the significant determinants as to whether or not a lender will decide to join you for the ride.

Think of it this way: would you tag along for a supposedly fun and worthwhile excursion if all the driver had written for directions was, “Depart point-A; Arrive at point-B?” I’d go so far as to say your confidence as a passenger would only increase with each additional detail in the driver’s plan, and that’s the mindset to have when drafting your financial plan: no fact is too small. It’s the mindset I had when I was trying to set up my businesses. Now, I prioritize it to help me increase and improve my portfolio—another good use for the plan!

Who’s it Even For?

But in fact, the essential utility of helping to attract investors is only part of the real, lasting value of a detailed and well-founded financial plan. The person for whom it will be of the highest importance is, in fact, you, the business owner. While your vision—your hopes, dreams, and aspirations for your business—are the things that will inspire you, that will keep you moving forward in pursuit of your goals, it is your financial plan that will ensure you get there safely. It will be there by your side the entire time, informing your decisions as you navigate the tricky path to establishing a successful business.

Because the financial plan is as much, if not more so, for you as it is for prospective collaborators, the key to writing an excellent financial plan is: write it for yourself. Treat it as a guide or roadmap for you and your business instead of an obligatory way to demonstrate that you’ve done your homework; the rest will follow. If your financial plan is sound enough that you’d feel confident planting your business on its soil, then chances are, future investors will see what you see.

Crunching the Numbers

A good financial plan is all about the numbers. It’s a way to anticipate your needs and expenditures, not just in the big picture but on every step along the way. It should include anticipated expenses, as well as profits and losses. These projections should be compared against your actual numbers as you move forward. Knowing the specifics will ensure that you’re not without a paddle and won’t be back into a corner and left to make poorly informed choices that will jeopardize your business.

Plan for Success, Be Prepared for Setbacks

One of the most valuable things I learned through my experiences is that you’re not going to be successful all of the time. When I was 19, I started a medical transportation business—unsuccessfully! But I picked myself up, got a Master of Science, a Master of Business Administration, and continued working to build my next company.

Soon I was a supply chain analyst at The Goodyear Tire & Rubber Company. I was then at Troxler Electronic Laboratories, Inc., and now, I have EPIC Health! And in large part, it’s because I had a solid financial plan going in.

A good financial plan will take into account more than just one possible outcome at each turn. Planning for contingencies is essential, not just in drafting your financial plan but in every stage of running your business. Of course, we always hope that Plan-A will work out smoothly, but if it doesn’t, you’ll be thankful you have Plan B, C—even D—to fall back on. There are always ups and downs and weaving both of those into your financial plan will ensure that you’re prepared for anything.