The expected revenues and expenses for at least a year should be projected in the cash flow section of the Financial Plan. It's better to make conservative predictions rather than be too optimistic when it comes to cash flows. As part of this section, a break_even analysis is essential. This is the "amount of units sold or sales dollars necessary to recover all expenses associated with generating these sales." (NxLevel for Entrepreneurs, 2005) The formula for calculating the break_even quantity is Total Fixed Costs/(Price _ Average Variable Costs).
Financial Plan _ The financial plan consists of four sections: Financial Worksheets, Cash Flow Projections, Financial Statements, and Additional Financial Information. All of these components will tell the story of how you plan to start or grow your business from a financial perspective. It is vital that you explain the assumptions under which you have based your projections, for example, "We assume that there are no unforeseen changes in economic policy to make our products and service immediately obsolete." or "We assume interest rates will stay the same over the next three years." (both quotes from Bplans.com sample business plans)
Basically, consumers are hunkering down to limit spending, save money, conserve resources, and change the way they've been living. The major influence on the health of an economy is the psychological state of its consumers. When there exists a broad belief that spending beyond necessity is unwise, people will change their habits and as a result, some businesses will have to close their doors. The economy is molting into a new, leaner animal. Rather than react in desperation to avoid doom, firms should interact with the current situation with innovative and forward thinking actions.
Competitive Analysis: Business by nature is competitive, and few businesses are completely new. If there are no competitors, be careful; there may be no market for your products. Expand your concept of competition. If you plan to open the first roller skating rink in town, your competition will include movie theaters, malls, bowling alleys, etc.