Your business plan financials are essential for lenders and investors who want to see hard figuresbefore putting money into your business. Solid financials could help you get loans and attractinvestors, even if you aren't operating yet."Financials can be very intimidating for a lot of small business owners," says Raman Chadha,executive director of the Coleman Entrepreneurship Center at DePaul University. "It's my experiencethat most small business owners don't know how to manage the numbers."Your business plan financial statement will cover three general items: an income statement, a balancesheet and a cash-flow statement, each with numerous subsets. The following is a general outline forcreating business plan financials and is not meant to be a comprehensive account of the financialdetails you will need.
The Income Statement
An income statement shows how much profit or loss you expect to have for the year. For newbusinesses, income statements should be broken down monthly or quarterly. Business in their secondto fifth years of operation should have quarterly or annual income statements, the Small BusinessAdministration advises.An income statement includes:
"Revenue growth is always going to take longer than you expect," Chadhacautions. "It's smart to be more conservative" in your estimates, he says.
Includes operating expenses such as costs for supplies, rents and salaries;loan payments, including interest; and fees for advisers, including attorneys andaccountants.
Cost of Goods Sold:
The cost of merchandising, manufacturing and bringing yourproduct to the market. Service business often do not need this.
Your sales minus all costs directly related to those sales.
Your company's profit after deducting your operating costs fromgross profit.
Calculated by subtracting your company's total expenses from totalrevenue.
Net Profit before Taxes:
The amount of income earned before taxes are taken out.
Net Profit after Taxes:
Net income minus taxes paid.
The Balance Sheet
A balance sheet provides an annual snapshot of your business financials. The figures are oftenrecorded for only one day. If you're not yet operating a business, American Express recommends youcreate a balance sheet from your personal assets and liabilities.A balance sheet includes:
Includes cash, inventory, accounts receivables such as credit andother payments owed to the company, and fixed assets. Fixed assets include machinery,property and goodwill. They are items that cannot be quickly converted into cash.