One of the most important aspects of starting a new business is creating a financial plan. This document will help you track your expenses, predict your income, and make sure your business is profitable.
Creating a financial plan is an essential step in ensuring the success of your event planning business. By taking the time to develop a detailed and accurate financial plan, you can avoid common pitfalls and set your business up for success.
Importance of a Financial Plan for Event Planning Business
A financial plan is a critical tool for any business, but it is especially important for event planners. Event planning is a notoriously unpredictable industry, and a well-crafted financial plan can help you navigate the ups and downs.
Elements of a Financial Plan
There are several key elements that should be included in your event planning business. They are:
1. Event Budget
The first and most important element of your financial plan is your event budget. This budget should include all of the costs associated with putting on an event, including venue rental, catering, staff, décor, and entertainment.
2. Income and Expenses
Your financial plan should also include a detailed analysis of your income and expenses. This will help you track your progress and make sure your business is on track to be profitable.
3. Cash Flow
Another important element of your financial plan is your cash flow. This is a detailed analysis of how much money is coming in and going out of your business. This information will help you manage your finances and make sure you have enough cash on hand to cover your expenses.
4. Profit and Loss Statement
A profit and loss statement (P&L) is a critical tool for any business, but it is especially important for event planners. This statement will help you track your income and expenses, and it will show you whether or not your business is profitable.
5. Break-Even Analysis
A break-even analysis is a tool that can help you determine how much revenue you need to generate in order to cover your costs. This information is critical for event planners, as it can help you price your events appropriately and ensure you are making a profit.
Let’s dig further by walking you through an example.
Financial Plan
To create a financial plan, include a summary of your complete and detailed financial picture (your full financial projections go in the Appendix).
This includes the following three financial statements:
Income Statement
Your income statement should include:
- Revenue: how much revenue you generate.
- Cost of Goods Sold: These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
- Net Income (or loss): Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.
Sample Income Statement for a Startup Event Planning Business
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| Revenue | $100,000 | $120,000 | $145,600 | $164,160 | $185,230 | |
| Expenses | ||||||
| Salaries | $50,000 | $60,000 | $70,600 | $82,160 | $95,230 | |
| Rent | $10,000 | $12,000 | $14,000 | $16,000 | $18,000 | |
| Utilities | $2,000 | $2,400 | $2,800 | $3,200 | $3,600 | |
| Marketing | $3,000 | $4,500 | $6,000 | $7,500 | $9,000 | |
| Total Expenses | $67,000 | $83,900 | $101,400 | $120,260 | $139,860 | |
| Net Profit | $33,000 | $36,100 | $44,200 | $52,960 | $61,680 |
Balance Sheet
Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:
- Assets: All of the things you own (including cash).
- Liabilities: This is what you owe against your company’s assets, such as accounts payable or loans.
- Equity: The worth of your business after all liabilities and assets are totaled and deducted from each other.
Sample Balance Sheet for a Startup Event Planning Business
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| ASSETS | ||||||
| Cash | $10,000 | $10,000 | $15,000 | $20,000 | $25,000 | |
| Accounts Receivable | $3,000 | $5,500 | $6,500 | $8,500 | $10,500 | |
| Prepaid Insurance | $100 | $200 | $300 | $400 | $500 | |
| Office Space & Furniture | $5,000 | $6,000 | $8,000 | $10,000 | $12,000 | |
| TOTAL ASSETS | $18,100 | $22,700 | $31,800 | $41,900 | $51,100 | |
| LIABILITIES & EQUITY | ||||||
| LIABILITIES | ||||||
| Loans Payable | $35,000 | $30,000 | $25,000 | $20,000 | $15,000 | |
| Credit Card Debt Owed | $1,500 | $2,000 | $3,000 | $4,000 | $5,000 | |
| Accounts Payable | $2,000 | $3,500 | $5,500 | $8,500 | $11,500 | |
| Unearned Revenue | $100 | $100 | $100 | $100 | $100 | |
| TOTAL LIABILITIES | $38,600 | $36,100 | $36,600 | $34,600 | $31,600 | |
| EQUITY | ||||||
| Owner Equity / Capital | $18,100 | $22,700 | $31,800 | $41,900 | $51,100 | |
| Retained Earnings | $61,680 | $74,680 | $99,680 | $135,680 | $181,680 | |
| TOTAL EQUITY | $79,780 | $110,380 | $136,380 | $170,490 | $222,790 |
Cash Flow Statement
Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:
- Cash Flow From Operations
- Cash Flow From Investments
- Cash Flow From Financing
Below is a sample of a projected cash flow statement for a startup event planning business.
Sample Cash Flow Statement for a Startup Event Planning Business
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | $83,530 | $144,020 | $216,112 | $306,933 | $420,293 |
| Change in Working Capital | ($34,300) | ($12,600) | ($15,200) | ($11,100) | ($21,600) |
| Plus Depreciation | $5,200 | $5,200 | $5,200 | $5,200 | $4,200 |
| Plus Amortization | $0 | $0 | $0 | $0 | $0 |
| Plus Preliminary exp written off | $0 | $0 | $0 | $0 | $0 |
| Net Cash Flow from Operations | $54,430 | $136,620 | $206,112 | $301,033 | $402,893 |
| CASH FLOW FROM INVESTMENTS | |||||
| Fixed Assets | ($25,000) | $0 | $0 | $0 | $0 |
| Intangible Assets | $0 | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($25,000) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from Equity | $0 | $0 | $0 | $0 | $0 |
| Cash from Debt financing | $154,662 | $0 | $0 | $0 | ($154,662) |
| Net Cash Flow from Financing | $154,662 | $0 | $0 | $0 | ($154,662) |
| Net Cash Flow | $184,092 | $136,620 | $206,112 | $301,033 | $248,231 |
| Cash at Beginning of Period | $0 | $184,092 | $320,712 | $526,824 | $827,857 |
| Cash at End of Period | $184,092 | $320,712 | $526,824 | $827,857 | $1,076,089 |
Appendix
You will also want to include an appendix section which will include:
- Your complete financial projections
- A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
- Any other documentation which supports what you included in the body of your business plan.
Conclusion
A well-crafted financial plan is essential for any event planning business. The financial plan should include a detailed budget, an analysis of income and expenses, cash flow projections, and a profit and loss statement. By taking the time to create a thorough financial plan, you can ensure that your business is on track for success.