Starting a business is exciting, but before you dive in, it is important to ask yourself the hard questions: will your business make money and how will you finance it? You have a great business idea with a name, vision, and product or service all figured out, and now it comes down to details. Preparing a business plan is an important step in determining if your business idea is viable. Here are the key items that you will need to include in the financial section of your business plan: 

 
Startup Costs and Funding Needs 

First things first, you need to determine how much money it will cost to launch your business. To do this, figure out all your start-up costs. This includes equipment costs, building or rental costs, inventory purchases, marketing costs, legal and licensing fees, and initial working capital. After determining your costs, you will have to consider how these costs will be funded.  

If your business requires a loan, look at our loan offerings. Provincial Credit Union offers a wide range of business loans, depending on your business needs. When it comes to borrowing for your business, one of the biggest pieces of advice from our account managers is to be prepared. "Having a detailed business plan is great and can make the process easier when it comes to financing for new business owners" (L.J. Business Services Team Member).  Understanding your personal financial situation can also help steamline the business loan application process. 

Tip: Did you know that the PEI Provincial Government has grants and loans for new start-up companies? See more details for the Small Business Investment Grant and Capital Acquisition Grant. 

Projected Income & Expenses 

Calculate your projected income over the next three to five years. This should include your projected sales, pricing strategies and assumptions, and expected growth rate. When you have your projected income, your next step will be to calculate your projected expenses. Think about recurring costs such as rent and wages and variable costs tied to sales or product volume. Don’t forget to consider one-time or infrequent expenses such as equipment repair, insurance, or technology upgrades.  

Profit & Loss Statement 

Gross profit equals your total revenue; your net profit is equal to your gross profit minus all your expenses. In other words, your net profit is the amount of money you take home. There are plenty of unknowns when calculating profit, so use conservative and realistic numbers to avoid overestimating your profit.  

Cash Flow Statement 

A cash flow statement shows when money is flowing in and out of your business. It assesses the liquidity of the business, in other words, how quickly a business can convert its assets into cash. This provides a clearer picture of your business’s potential financial health.   

Break-Even Analysis 

This analysis determines at what point in time your business revenue will cover all your expense costs. This is an important step in understanding your business’s pricing and sales strategy. Use this break even calculator to help you determine what it takes for your business to be profitable.  

If you are looking for more information on how to create a business plan, use this brochure as a guide.   To book an appointment to talk with someone from our business services team, text us at 1-855-728-2211 or call your local branch.