Business – 1.1 Enterprise – Business plans | e-Consult
1.1 Enterprise – Business plans (1 questions)
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Financial projections provide quantitative evidence of the business’s future viability and are crucial for securing investment. The main elements are:
- Sales forecast: projected revenue based on realistic assumptions.
- Cost of goods sold (COGS): direct costs associated with producing the product or delivering the service.
- Operating expenses: salaries, rent, marketing, utilities, and other overheads.
- Profit and loss statement: showing gross profit, operating profit, and net profit.
- Cash flow forecast: inflows and outflows to ensure liquidity.
- Break‑even analysis: point at which total revenues equal total costs.
Example of a three‑year profit forecast:
| Year | Revenue (£) | COGS (£) | Gross Profit (£) | Net Profit (£) |
| Year 1 | 150,000 | 90,000 | 60,000 | 15,000 |
| Year 2 | 225,000 | 112,500 | 112,500 | 45,000 |
| Year 3 | 337,500 | 135,000 | 202,500 | 90,000 |
This table illustrates expected growth in revenue and profitability, assuming consistent market penetration and cost control.