New Business Plan:Your goal for your type of business is to create a complete and well-supported pro forma or projected profit and loss document (Income Statement or other similar name depending on the type of business). In a typical business plan, you would generally be required to include a Balance Sheet and a Statement of Cash Flow, but, for the purposes of this course, you should only provide the P&L document. Other documents may be added but they will not affect your final grade for the project. If you are working on a plan for an established business, you must review historical financial data in order to complete your projections, and obtain detailed financial operating statements for a minimum of three years and preferably five years. If you are working on a plan for a start-up business, you will reflect on research gathered related to your particular industry and analyze comparable businesses in your industry.3.In preparing the statements, it is commonplace to start with a monthly analysis for the first operating year, a quarterly analysis for the second and possibly the third operating year and an annual analysis for the fourth and fifth operating years. In most start-up businesses, profit is not expected to be achieved until the third operating year or until a point where the operations are normalized or “stabilized.”Helpful Questions for Getting Started for a Start-Up Businessâ€¢If you are projecting for a new business, to what existing businesses can you look for data? How can you ensure that your information sources are accurate and reliable?â€¢Where can you find the necessary documentation (monthly statements for the first year, quarterly analysis for the second and third year, and data to assist you in projections for the fourth and fifth years) for a competitor or comparable business in your industry?â€¢At what point is your business expected to begin to turn a profit? Use your comparative analysis to project for your own business. Does this deviate from the typical third year “stabilized” scenario?â€¢What are the key terms you need to employ in your pro forma document?â€¢What is the specific segment mix of your business (tourism, business and corporate, and meetings and conventions)? What are the intrinsic or particular characteristics of the type of business or that you will need to address in your reporting and projections?â€¢Have you analyzed the historical operating results of the comparable business sufficiently?â€¢Dr. Craddock uses the example of the hotel industry. Does your industry have customer demographics or seasonal variations as well?â€¢What is the current and projected market penetration of the comparable business in your industry? How does this relate to your actual and anticipated competition?â€¢Project the components of your revenue stream. Do the same for expenses. Do you anticipate variations and variances you need to include?â€¢How would you calculate Departmental Operating Costs? Deductions from Income? General and Administrative Costs?â€¢What are your “Bases for Assumptions”? Do they correlate to each line item in your Financial Statement? Are they sufficiently detailed, as Dr. Craddock suggested?Has an income statement been provided with at least one year of projected revenues, detailed expenses, and net income or net loss?â€¢Is the statement properly formatted, calculated, subtotaled, and totaled with underlines and double underlines where required?â€¢Are all required revenue and expenses provided for the type of industry?â€¢Is there a detailed assumption tied to each line item on the income statement that explains specifically how the amount was derived?â€¢Do the assumptions provide a valid source if information that supports the data in the projected income statement?â€¢Do the assumptions accurately reflect the mission, vision, and objectives of the entity?