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June 27, 2008
Nail The Financials
Your business plan financials are imperative to your success if you are seeking money from lenders or investors. Your financials are what they will turn inside out as well as your executive summary the rest of the plan is just details and clarification.
Your financials should cover three different aspects: income statement, balance sheet, and cash-flow statement, each with numerous subsets.
Income Statement
The income statement basically shows how much profits or losses you expect to show at the end of the year. The easiest way to exhibit this for your lenders/investors is to break down your income statement by month. Income statments include revenues, expenses, cost of goods sold, gross profit, net profit, net profit before taxes, and net profit after taxes.
Balance Sheet
The balance sheet is an annual (meaning yearly) snapshot of your financials. A balance sheet includes current assets, liabilities, and equity.
Cash Flow Statement
Lastly is the cash flow projections. This financial statement can be hard to construct especially considering that you haven't started business yet, but it's important to work through so that your lenders/investors know how you are managing your money. Cash flow statement includes cash inflows, and cash outflows. Your cash flow projection will be your cash outflow subtracted from your cash inflow.
So there is a basic run down, please let me know if you have any questions about the financials or need further clarification.
Posted by cmanscill at June 27, 2008 8:31 AM
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