As a rule of thumb, you should always include financials as part of a complete business plan package. Financial components are a must when creating a business plan that is going to be presented to bankers or investors. They need to evaluate your financial projections to see whether or not your business is going to be profitable. They want to make money and are not going to invest in a business or loan any funds without seeing the bottom line - and all the numbers in between. Even if the plan is for internal uses, it should still contain financial projections. Everyone that looks at a business plan expects to see financials.

At the very least, you should include a cash flow statement, income statement and balance sheet. Before preparing your financials, you should consult with an accountant, financial advisor or other finance professional to review the financial structure of your business. Do things add up and make sense? Has everything bee properly accounted for? Assumptions are okay, as long as they coincide with industry averages and competitive benchmarks. No one expects you to hit a line drive, but you better be somewhere in the ballpark. Remember to stick with generally accepted accounting rules - don't get too creative.

Another Viewpoint

If you have all the financing you need then no, financials are not necessary. If however you want to borrow money or get investors interested then financials are not only necessary, they may be the most important part.

Having done M&A work for a Fortune 100 company I can tell you that a properly constructed set of financials can often tell an investor everything he needs to know after he has read the executive summary.

Accepting my finance background bias, a business plan without financials is just a fairy tale!

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