Business Plan Financial Projections

You may be expanding your business or starting a new business for many reasons. Your financial backers, however, are interested in their invest
business plan is represented by the financial projections which must include income statements, balance sheets, and cash flow statements. These
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 th
exceeds total expenses.  The resulting profit is added to the retained earnings account (accumulated earnings of a company since its inception les
retained earnings account.  The projected income statements demonstrate that your business has the ability to earn profits over time.

Year 1 Year 2 Year 3 Year 4 Year 5

Revenues $1,976,000 $2,074,800 $2,178,540 $2,287,467 $2,401,840

Cost of Sales 1,213,659 1,274,342 1,338,059 1,404,962 1,475,210

Gross Profit $762,341 $800,458 $840,481 $882,505 $926,630

Accounting 6,000 6,300 6,615 6,946 7,293

Advertising & Promotion 15,000 12,360 12,731 13,113 13,506

Bank Charges 41,496 43,571 45,749 48,037 50,439

Compensation & Benefits 246,643 254,042 261,663 269,513 277,598

Consulting Fees 2,400 0 0 0 0

Insurance 1,000 1,050 1,103 1,158 1,216

Lease - Facilities 336,000 336,000 336,000 336,000 336,000

Legal & Professional 500 500 500 500 500

Licenses & Fees 500 510 520 531 541

Maintenance 600 612 624 637 649

Miscellaneous 1,800 1,836 1,873 1,910 1,948

Office supplies 2,700 2,754 2,809 2,865 2,923

Security 720 742 764 787 810

Telephone 1,800 1,836 1,873 1,910 1,948

Utilities 4,200 4,410 4,631 4,862 5,105

Website 1,800 1,800 1,800 1,800 1,800

  Total Operating Exp. 663,159 668,323 679,255 690,569 702,276

EBIDTA $99,182 $132,135 $161,226 $191,936 $224,354

Depreciation 4,916 4,916 4,916 4,916 4,916

Operating Profit $94,266 $127,219 $156,310 $187,020 $219,438

Interest Expense 43,199 40,274 37,059 33,524 29,639

Earnings Before Taxes 51,067 86,945 119,251 153,496 189,799

Income Taxes 17,873 30,431 41,738 53,724 66,429

Net Income $33,194 $56,514 $77,513 $99,772 $123,370

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 am
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 be
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 busin
retained earnings, which are the accumulated profits of the business less the losses and withdrawals. The purpose of the balance sheet is to report
particular point in time.
Begin Year 1 Year 2 Year 3 Year 4 Year 5

Cash $33,150 $110,697 $210,697 $243,259 $293,834 $363,370

Inventory 425,000 425,000 424,781 446,020 468,321 491,737

Prepaid Leases 28,000 28,000 28,000 28,000 28,000 28,000

  Total Current Assets $486,150 $563,697 $663,478 $717,279 $790,155 $883,107

Fixed Assets 33,850 33,850 33,850 33,850 33,850 33,850

Less:  Depreciation 0 4,916 9,832 14,747 19,664 24,579

Net Fixed Assets 33,850 28,934 24,018 19,103 14,186 9,271

Total Assets $520,000 $592,631 $687,496 $736,382 $804,341 $892,378

Accounts Payable 0 68,908 139,654 146,637 153,968 161,667

Long Term Debt 468,000 438,529 406,133 370,522 331,377 288,346

Total Liabilities 468,000 507,437 545,787 517,159 485,345 450,013

Owner's Equity

  Paid-in Capital 52,000 52,000 52,000 52,000 52,000 52,000

  Retained Earnings 0 33,194 89,709 167,223 266,996 390,365

Total Liabilities & Equity $520,000 $592,631 $687,496 $736,382 $804,341 $892,378

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 (ca
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 ha
consume cash, but do not reduce income - they are recorded as a reduction to liabilities. In our income statement example (above), although net i
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 bala
statements "tie together." This is a simple check potential investors or lenders will perform.
Year 1 Year 2 Year 3 Year 4 Year 5

Operating Profit $94,266 $127,219 $156,310 $187,020 $219,438

Add:  Depreciation 4,916 4,916 4,916 4,916 4,916

99,182 132,135 161,226 191,936 224,354

Working Capital Investment (68,908) (70,966) 14,256 14,968 15,719

Cash From Operations 168,090 203,101 146,970 176,968 208,635

Interest Expense 43,199 40,274 37,059 33,524 29,639

Income Taxes 17,873 30,431 41,738 53,724 66,429

Net Cash Before Debt Pmt 107,018 132,396 68,173 89,720 112,567

Debt Payment 29,471 32,396 35,611 39,145 43,031

Change in Cash $77,547 $100,000 $32,562 $50,575 $69,536

Cash Reconciliation

Beginning Cash $33,150 $110,697 $210,697 $243,259 $293,834

Change in Cash 77,547 100,000 32,562 50,575 69,536

Ending Cash $110,697 $210,697 $243,259 $293,834 $363,370

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 poten
The Business Plan Store will prepare detailed financial projections for your business or your business plan that express your vision in terms of d
that is easily understandable to all people in the lending industries.