21. Three Year Financial ProjectionsBy Roger Bryan
The three year summary or the thirty six month summary is crucial aspect of the business plan that gives a bird eye view of the projected financial influx involved in the drafted business plan.
The projected three year summary should be based on the prevailing market conditions and other key indicators and should take into consideration the current and expected inflation levels. One can make this summary more coherent by dividing it into subsections.
Suggested subsections for this three year summary include a section detailing the list of financial actions required to be executed within the three year period. Further, a need may arise of financial transaction even after the stipulated three year period but still related to various procurements of that period. A separate section for such finances helps in making the financial summary of the business plan more transparent and accurate. In essence, the cash flow projections and the income statement should cumulatively include the three year summary.
The projected income stream from the business is also included in the three year summary. Based on certain key indicators, one can draft out the expected income levels of the next 36 months. One should also include the parameters on which the assumptions for this summary are based. For e.g. if the company plans to use Google Ad-sense to direct users to a website which is selling a product, by assuming a conversion rate (again determined by various factors) for the people landing on the selling web page, one can estimate the income stream. The cumulative outcome of various related factors can give the projected income over the span of three years.