The financial section of a business plan is critical to convincing others, and even yourself, that you will be able to turn your idea into an opportunity.  This is the section where you must lay out projections for the next 3-5 years and also lay out your assumptions about the financial and operational characteristics of your small business.  As you conduct this exercise, you will be able to see how certain decisions affect the profitability of your new business.  With Lotus or another computer spreadsheet program, it is now very easy to change your assumptions and see the impact on the bottom line.

For any entrepreneur, before launching a business, there are two essential questions that must be asked:

How much money do we need?
When do we need the money?

The answers to these two questions are derived from the assumptions made in other areas of the business plan.  Although the financial plan is not a very exciting portion of the business plan, it is where objectives, assumptions, strategies and tactics are quantified.

Every financial plan should have three sections:
cash-flow statement
income statement; and
balance sheet

Cash-flow
Cash is what enables a company to remain in operation.  Although your business might be profitable, without a positive cash flow, the company could go out of business.  Once the company is launched, monitoring the cash flow will help you decide if you need to secure a bank loan or other financing when expanding operations.

Income Statement
The second portion of the financial plan should include the income statement.  This is the area that shows the company's profit or loss.  This statement differs little from the cash flow statement, except that the cash flow statement is a more accurate indicator of the actual cash on hand at a particular moment.
 

Balance Sheet
The balance sheet highlights your corporations assets and liabilities at a particular point in time.  The assets are broken down into current assets, like cash and accounts receivable and fixed assets, like office furniture and photocopiers, while liabilities encompass both current liabilities, such as accounts payable and long-term liabilities.
 

World Wide Web sites
So where can you go on the internet for assistance developing all these complex financial documents?

The best site I found was the Small Business Administration site, located at:

http://www.sbaonline.sba.gov
On this site, you'll find a business plan workshop, which includes all the necessary forms to develop a financial management plan including worksheets for cash flow, income projections and balance sheets
as well as multiple listing for financial software.

http://www.inc.com/finance/
The editors at Inc. Magazine have assembled an electronic guide to finance.  This web site includes:
gateways to financial bulletin boards, newsgroups and listserves where you can have your financial questions answered;
links to web sites, such as the Ohio University's virtual library on finance and investments; and
tutorials and glossaries to assist with learning about financial plans

http://brc.uwindsor.ca/
This Business Resource Center is home to a library of financial resources and also includes links to small business consulting.  There are many web sites on the internet for firms, companies and consultants all offering their financial management expertise to companies that are just getting started.
 
By spending the time on developing a solid financial plan and evaluating different scenarios, the small business owner has an opportunity to perform a trial run of the business without having to pay if it turns out that the idea is not profitable.