Financial Information

Your business plan will include a financial section that includes underlying assumptions, start-up expenses, a profit and loss statement, a breakeven analysis, a cash flow statement and a balance sheet. The financial information will be for a period of three to five years. It is important that this information be prepared by a professional spa consultant or someone else who has experience with the financial operations of existing spas and salons. Although this section includes estimated financial projections, this data should be based on reliable historical data.

Underlying Assumptions

The business plan includes the underlying assumptions that were used to prepare the financial projections. This would include such items as rent, formula used to project personnel cost, real and personal property taxes, days and hours of operations, method of computing gross income and gross profit, loan and lease amounts including interest and lease rates, etc.

Start-Up Expenses

This section summarizes the start-up plan and explains the start-up costs which are costs that must be made before the business can become operational in the first month.  Also included among uses of funds is a list of assets that must be acquired. The summary also shows sources of funding for both the expenses and the initial assets, which includes a bank loan and owner's equity. For accounting purposes, certain front-end costs may be treated as intangible assets rather than expenses.

Profit and Loss Statement

The profit and loss or income statement is where a case is made for the potential of the business to generate cash. This is where revenue, expenses, capital and cost of goods are recorded. The outcome of the combination of these elements demonstrates how much money the business is projected to make or lose during the period covered by the statement. The income statement and cash flow statement differ in that an income statement does not contain details of when revenue was collected or expenses paid. This business plan contains a profit and loss statement for each year that the plan covers. It also includes projected profit and loss for each month during the first year of operations. The important points of the profit and loss projections are percentage increase in sales and profits, gross margins and key budget items. Gross margin is sales less cost of sales, and profit (or loss) is gross margin less operating expenses and taxes. The result is profit if it's positive, loss if it's negative.

Breakeven

Assuming that the business is properly marketed, it is projected that income will slightly exceed or equal expenses during the third year of operation. The profit and loss statements are based on certain assumptions explained elsewhere in the plan.

Cash Flow Statement

The cash flow statement included in this section shows how much money will be needed to operate the business, when it will be needed and where the money will come from. The cash flow statement looks at cash and sources of revenue minus expenses and capital requirements. The cash flow statement provides a view of how much money the business will have at any given time and when the business is likely to need more cash. Based on the following cash flow analysis, it is projected that cash flow over the next five years can be managed simply by the growth of the cash flow of the business.

Balance Sheet

A balance sheet is a financial statement providing a "snapshot view" of the financial condition of the business on a specified date. An annual balance sheet provides a "snapshot" as of the end of the year. A monthly balance sheet provides a "snapshot" as of the end of the month. The three principal divisions of the balance sheet are assets, liabilities and net worth (equity). The balance sheet may also be known as a financial statement, a net worth statement or a statement of financial condition. Simply stated, a balance sheet is a list of assets owned and debts owed at a point in time with dollar values attached to the items on the list. The difference between the value of assets and the value of liabilities is known as net worth or equity. The most important item on the balance sheet is the cash in the first row.