You may be expanding your business or starting a new business for many reasons. Your financial backers, however, are interested in their investment. To them, the heart of your business plan is represented by the financial projections which must include income statements, balance sheets, and cash flow statements. These statements must convince your backers of two very important details: your business will generate enough cash to (1) repay your backers and (2) fuel your incentive to succeed.

If you only need financial projections, whether for your business plan, or for planning your business, give us a call - we can help!

We've posted a brief discussion about financial statements here: Understanding Financial Statements

Example Income Statements

The income statement (profit and loss statement) shows the revenue, expenses, and net income (or net loss) for a period of time.  Net income is the amount by which total revenue exceeds total expenses.  The resulting profit is added to the retained earnings account (accumulated earnings of a company since its inception less dividends).  A net loss reduces the retained earnings account.  The projected income statements demonstrate that your business has the ability to earn profits over time.

A discussion about understanding the income statement is here

Example Balance Sheets

The balance sheet is a statement of financial position that shows total assets = total liabilities + owners' equity. Financial position refers to the amount of resources (i.e., assets) and the liabilities of the business on a specific date. Owners' equity is the residual interest, or the amount of the assets to which the owners have claim because creditor claims (liabilities) legally come first. Owners' equity in a business derives from two sources: (1) paid-in capital, which is the investment of cash or other assets in the business by the owner or owners; and (2) retained earnings, which are the accumulated profits of the business less the losses and withdrawals. The purpose of the balance sheet is to report the financial position of a business at a particular point in time.

A discussion about understanding the balance sheet is here

Example Cash Flow Statements

Revenue does not necessarily mean receipt of cash, and expense does not automatically imply a cash payment. Net income and net cash flow (cash receipts less cash payments) are different. For example, taking out a bank loan generates cash, but this cash is not revenue since no merchandise has been sold and no services have been provided. Loan repayments consume cash, but do not reduce income - they are recorded as a reduction to liabilities. In our income statement example (above), although net income for Year 1 was $33,194, cash flow was $77, 547. The beginning cash balance in Year 1 was $33,150. Cash flow in Year 1 was $77,547. Add the two, and the ending cash balance in Year 1 becomes $110,697. Your statements "tie together." This is a simple check potential investors or lenders will perform.

A discussion about understanding the cash flow statement is here

Your business plan is the heart and soul of your operation and the most important set of documents you will provide a lending institution or potential investor.

The Business Plan Store will prepare detailed financial projections for your business or your business plan that express your vision in terms of dollars and units of time, and in a format that is easily understandable to all people in the lending industries.