Business Plan Financial Projection for Vehicle Service

BusinessPlan: Financial Projection for Vehicle Service

BusinessPlan: Financial Projection for Vehicle Service

Financialprojections form an integral part of any feasible business plan. Forthe car checking center business, financial statement forecastingprovides the expected future financial position basing on theforeseeable future conditions. It gives a clue about prospectiveperformance of the car checking center. Such statements includebalance sheet and income statement. Income statement is a forecastsummary of the expected expenses and revenues for a defined period oftime. This paper will focus on the financial projections of the carchecking center business.

Theincome statement forecast will give a summary of car checking centerprojected revenues and expenditures for the period of three years.The forecast will end with the net income of the three years. Thesales forecast is critical as it enables the management to estimatethe costs of production(Barth,&nbspn.d.).The descriptions of the purchases, overhead costs and wages gives aclose to accurate forecast. The expenses remain unaffected by changein sales in the short-term. The sales for this project stand at$360,000 because each unit sale is $100 for the 100 cars per month.

Balancesheet Forecast

Tocome up with the balance sheet forecast for the three years, carservice center will base on the projections for the first year sincewe do not have balance sheets for the previous years. It isanticipated that some factors such as entry of competitors at somepoint to the easy to penetrate market will affect performanceschedule. The business plan should outline a contingency plan tocounter such an eventuality(Ferreira,&nbspPretorius,&nbsp&amp Von,&nbsp2013).If all conditions are constant, the business will achieve 15% growthin sales annually basing on the forecast. This is because the directcost of sales over the three years is most likely to remain constantbecause of the nature of business. Also, the depreciation rate of 10%on the fixed expenses can easily give an accurate prediction of thefinancial standing of the fixed assets after three years becausecapital expenditures should be planned earlier. From the sales,direct costs and fixed expenses, we can forecast the financialposition of the car service center for three years.

Thebreak-even point reveals the point at which production cost matchesthe revenues. The break even for the car business will be at 93units. This will inform the management when setting the price. It isimportant to supply a variety of the analysis to compare the totalcosts, revenue and break-even point(Ferreira and Pretorius,&nbsp2013).The only challenge that will affect the estimates relates to changesin demand for the products. This will cause the chart curves to bendeither way of the axis.

Asdiscussed, financial statements offer an accurate estimate thebusiness potential. The financial statement is unique as it does notshow any changes in the value of the company. The cash flow will helpcar service business to venture confidently into business by offeringa benchmark for their investment. It will also guide in makingdecisions during the implementation of the plan.

References

Barth,&nbspM.&nbspE.(n.d.). Including Estimates of the Future in Today`s FinancialStatements.&nbspSSRNElectronic Journal.doi:10.2139/ssrn.947525

Ferreira,&nbspP.,Pretorius,&nbspD., &amp Von,&nbspW.&nbspR. (2013).&nbspGAAPhandbook 2014.Durban [South Africa: LexisNexis.

Business Plan Financial Projection for Vehicle Service

BusinessPlan: Financial Projection for Vehicle Service

BusinessPlan: Financial Projection for Vehicle Service

Financialprojections form an integral part of any feasible business plan. Forthe car checking center business, financial statement forecastingprovides the expected future financial position basing on theforeseeable future conditions. It gives a clue about prospectiveperformance of the car checking center. Such statements includebalance sheet and income statement. Income statement is a forecastsummary of the expected expenses and revenues for a defined period oftime. This paper will focus on the financial projections of the carchecking center business.

Theincome statement forecast will give a summary of car checking centerprojected revenues and expenditures for the period of three years.The forecast will end with the net income of the three years. Thesales forecast is critical as it enables the management to estimatethe costs of production(Barth,&nbspn.d.).The descriptions of the purchases, overhead costs and wages gives aclose to accurate forecast. The expenses remain unaffected by changein sales in the short-term. The sales for this project stand at$360,000 because each unit sale is $100 for the 100 cars per month.

Balancesheet Forecast

Tocome up with the balance sheet forecast for the three years, carservice center will base on the projections for the first year sincewe do not have balance sheets for the previous years. It isanticipated that some factors such as entry of competitors at somepoint to the easy to penetrate market will affect performanceschedule. The business plan should outline a contingency plan tocounter such an eventuality(Ferreira,&nbspPretorius,&nbsp&amp Von,&nbsp2013).If all conditions are constant, the business will achieve 15% growthin sales annually basing on the forecast. This is because the directcost of sales over the three years is most likely to remain constantbecause of the nature of business. Also, the depreciation rate of 10%on the fixed expenses can easily give an accurate prediction of thefinancial standing of the fixed assets after three years becausecapital expenditures should be planned earlier. From the sales,direct costs and fixed expenses, we can forecast the financialposition of the car service center for three years.

Thebreak-even point reveals the point at which production cost matchesthe revenues. The break even for the car business will be at 93units. This will inform the management when setting the price. It isimportant to supply a variety of the analysis to compare the totalcosts, revenue and break-even point(Ferreira and Pretorius,&nbsp2013).The only challenge that will affect the estimates relates to changesin demand for the products. This will cause the chart curves to bendeither way of the axis.

Asdiscussed, financial statements offer an accurate estimate thebusiness potential. The financial statement is unique as it does notshow any changes in the value of the company. The cash flow will helpcar service business to venture confidently into business by offeringa benchmark for their investment. It will also guide in makingdecisions during the implementation of the plan.

References

Barth,&nbspM.&nbspE.(n.d.). Including Estimates of the Future in Today`s FinancialStatements.&nbspSSRNElectronic Journal.doi:10.2139/ssrn.947525

Ferreira,&nbspP.,Pretorius,&nbspD., &amp Von,&nbspW.&nbspR. (2013).&nbspGAAPhandbook 2014.Durban [South Africa: LexisNexis.