Once you have listed all of your operating expenses, the total will reflect the monthly cost of operating your business. Multiply this number by six, and you have a six-month estimate of your operating expenses. Adding this amount to your total startup expenses list, and you have a ballpark figure for your complete start-up costs.
Now you can begin to put together your financial statements for your business plan starting with the income statement. The income statement shows your revenues, expenses, and profit for a particular period—a snapshot of your business that shows whether or not your business is profitable.
Subtract expenses from your revenue to determine your profit or loss. While established businesses normally produce an income statement each fiscal quarter or once each fiscal year , for the purposes of the business plan , an income statement should be generated monthly for the first year. Not all of the categories in this income statement will apply to your business. Eliminate those that do not apply, and add categories where necessary to adapt this template to your business.
If you have a product-based business, the revenue section of the income statement will look different. Revenue will be called sales, and you should account for any inventory. The cash flow projection shows how cash is expected to flow in and out of your business. It is an important tool for cash flow management because it indicates when your expenditures are too high or if you might need a short-term investment to deal with a cash flow surplus.
As part of your business plan, the cash flow projection will show how much capital investment your business idea needs. For investors, the cash flow projection shows whether your business is a good credit risk and if there is enough cash on hand to make your business a good candidate for a line of credit , a short-term loan , or a longer-term investment.
You should include cash flow projections for each month over one year in the financial section of your business plan. Do not confuse the cash flow projection with the cash flow statement.
The cash flow statement shows the flow of cash in and out of your business. In other words, it describes the cash flow that has occurred in the past. The cash flow projection shows the cash that is anticipated to be generated or expended over a chosen period in the future.
There are three parts to the cash flow projection:. The balance sheet reports your business's net worth at a particular point in time. So you can plan where to move money, when.
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Try Bench. Share this article. Get Started. It is posted here with the express permission of the client Executive names are fictitious. The following financial projections are based on conservative sales forecasts by month for the next twelve months, and by year for the four years thereafter. We will convert our DOS-based customers to the Enterprise Software Solution at the average rate of 25 customers per month.
We expect to have all of our customers converted by June Details of projected sales and conversions are included under the heading Revenue Assumptions. Details of estimated costs are included under the heading Expense Assumptions. OBRA e-z will generate negative income from July until April while absorbing the expense to upgrade software and jump start its sales and marketing activities.
We expect to be generating profits beginning May and every month thereafter. We will have crossed the break-even point in May and project profitability thereafter. Pro forma financial statements follow. Cost of Goods Sold.
Gross Profit. Software Development - MasterLink. Selling Expense. Office Expense. Operating Profit.
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