Notice after each account item that a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
Also, notice J&B's three year Forecasted Income Statement is one page in length. The revenue and expense "items" are listed on the left hand side, while each year's forecasted revenues and expenses ("values") are shown in a column to the right. Your forecasted income statement for a three year period should appear in a similar fashion. Moreover, it is more professional and investors can compare your expected revenue and expense projections from year to year.
This concludes our discussion on how your forecasted income statements should appear in your Financial Plan. Remember it is imperative to understand the theory behind the income statement before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Income Statement ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
2. THE FORECASTED BALANCE SHEETS
The next statement to appear in the financial plan is your Forecasted Balance Sheets. Three, annual (year end) Forecasted Balance Sheets should follow your three year projected income statements. These forecasted balance sheets show investors the items your business anticipates to own at the beginning and end of each forecasted year. In addition, these statements will show investors how much your business anticipates to owe at the beginning and end of each forecasted period. By developing a forecasted annual balance sheet for three years into the future, you and investors will be able to determine if your proposed business provides an opportunity (IE profitable).
In addition to the three year forecasted balance sheets, investors will want to see an opening balance sheet. An opening balance sheet generally shows the businesses' assets, liabilities, and owner's investments into the business.
The three year forecasted balance sheets should be placed on one page. Moreover, the one page will consist of four columns - one column for your opening balance sheet, one column for the first year forecasted balance sheet, one column for the second year forecasted balance sheet, and one column for your third year forecasted balance sheet. Below provides an example of J&B Incorporated's forecasted Balance Sheet.
Ending Cash (note 21) | $ 63,314 | $ 57,608 | $ 61,968 | $ 94,091 |
Office Supplies (note 6) | $ 0 | $ 500 | $ 735 | $ 476 |
Finished Diskette Inventory (note 2) | $ 0 | $ 6,683 | $ 2,803 | $ 1,790 |
Finished CD Inventory (note 2) | $ 0 | $ 3,103 | $ 2,072 | $ 2,053 |
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Net Computer Equipment (note 16) | $ 7,602 | $ 9,426 | $ 10,034 | $ 11,642 |
Net Office Furniture (note 17) | $ 1,412 | $ 2,425 | $ 3,018 | $ 3,712 |
Net Intangible - Initial R&D (note 18) | $ 47,772 | $ 31,848 | $ 15,924 | $ 0 |
Net Intangible - Future R&D (note 19) | $ 0 | $ 74,161 | $140,923 | $179,789 |
Accounts Payable (note 22) | $ 0 | $ 4,975 | $ 5,274 | $ 6,394 |
Wages & Employee Benefits (note 23) | $ 0 | $ 1,686 | $ 2,049 | $ 2,336 |
Operating Loan Payable (note 13) | $20,000 | $ 0 | $ 0 | $ 0 |
Taxes Payable (note 20) | $ 0 | $ 29,698 | $ 31,728 | $ 34,919 |
100 Class A Common Shares(note 24) | $ 100 | $ 100 | $ 100 | $ 100 |
50 Class B Common Shares (note 24) | $100,000 | $100,000 | $100,000 | $100,000 |
Retained Earnings (note 25) | $ 0 | $ 49,294 | $ 98,326 | $149,804 |
* April 30, 1998 represents the forecasted account balances at the end of the product's development phase. | ||||
** April 30, 1999 represents the forecasted account balances at the end of the company's first year of operation. |
Notice J&B's three year Forecasted Balance is one page in length. The Asset, Liability, and Equity "items" are listed on the left hand side, while each year's forecasted account balances (values) are shown in a column to the right. Your forecasted balance sheet for a year three period should appear in a similar fashion. It is more tidy and investors can compare your expected financial position from year to year.
Also, notice after each account item that a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
This concludes our discussion on how your projected balance sheet should appear in your Financial Plan. Remember it is imperative to understand the theory behind the Balance Sheet before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Balance Sheet ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
3. FORECASTED CASH FLOW STATEMENTS
The next statement to appear in the financial plan is your Forecasted Cash-flow Statements. The Cash Flow Statement is a tool used to forecast the movement of cash into and out-off the business. The movement of cash into a company may result from sales to customers, cash from investors, cash from bank loans, cash from the owners, cash from interest earned, cash from commission sales, or from any other source that provides cash to the business. The movement of cash out-off the company might include items such as advertising, wages and salaries, inventory purchases, payment on taxes, payment on business loans, utilities, owner withdrawals, rent, dividends, and so on.
Without the necessary cash, a business will not survive. Therefore, a forecasted cash flow statement is constructed to determine if an entrepreneur's business will have enough cash to carry out the day to day (month to month) operations.
A cash flow statement can be organized on a daily, weekly, monthly or quarterly bases. Most bankers and other investors, however, prefer see a monthly cash flow statement for a three year period. In other words, you will be required to develop three forecasted cashflow statements, each consisting of a twelve month period.
This may seem overwhelming at first, but with the aid of a spreadsheet program such as Lotus 123 or Excel, the task becomes rather simple. If you do not have a spreadsheet program, you are advised to purchase one and learn how it operates - It is an invaluable business tool that will save you lots of time and money. Below provides an example of J&B's forecasted cashflow statement for a three year period. (please note: normally each annual cashflow statement is constructed in a spreadsheet program and consist of a twelve month forecasted period. Due to the margins of this program, we are unable to place twelve columns on one page. As a result, we have used two pages for each year to illustrate J&B's annual forecasted cash flow statement).
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Percentage of Sales (per month) | 3% | 3% | 8% | 8% | 9% | 9% | 10% |
Total Unit Sales/ Month) | 236 | 236 | 631 | 631 | 709 | 709 | 788 |
Diskette Sales (note 26) | 142 | 142 | 378 | 378 | 426 | 426 | 473 |
CD Sales (note 26) | 83 | 83 | 221 | 221 | 248 | 248 | 276 |
Internet Sales (note 26) | 12 | 12 | 32 | 32 | 35 | 35 | 39 |
Weighed Average Selling Price (1) | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 |
Cash From Product Sales (100%) | $17,472 | $17,472 | $46,592 | $46,592 | $52,416 | $52,416 | $58,240 |
Less: Bad Debt Expense (1%) | $ 175 | $ 175 | $ 466 | $ 466 | $ 524 | $ 524 | $ 582 |
Purchase of Diskettes (note 27 a) | $8,670 | $ 0 | $ 0 | $ 8,670 | $ 0 | $ 8,670 | $ 0 |
Purchase of CD (note 27 b) | $2,500 | $ 0 | $ 0 | $ 0 | $ 2,500 | $ 0 | $ 0 |
Credit Card Charges (note 27 c) | $ 877 | $ 877 | $ 2,339 | $ 2,339 | $ 2,632 | $ 2,632 | $ 2,924 |
Packaging Charges (note 27 d) | $ 130 | $ 130 | $ 347 | $ 347 | $ 391 | $ 391 | $ 434 |
Actual Shipping Charges (note 27 e) | $ 636 | $ 636 | $ 1,696 | $ 1,696 | $ 1,908 | $ 1,908 | $ 2,120 |
Toll Free Charges (note 27 f) | $ 0 | $ 471 | $ 471 | $ 1,255 | $ 1,255 | $ 1,412 | $ 1,412 |
Commission on Sales (note 27 g) | $ 0 | $ 236 | $ 236 | $ 631 | $ 631 | $ 709 | $ 709 |
Product Miscellaneous (note 27 h) | $ 118 | $ 118 | $ 315 | $ 315 | $ 355 | $ 355 | $ 394 |
Advertising | $5,000 | $5,000 | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 |
Wages & Employee Benefits | $6,217 | $6,900 | $10,464 | $10,857 | $10,857 | $10,857 | $10,857 |
Research & Development | $7,630 | $8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 8,240 |
Casual Labor | $ 0 | $ 0 | $ 0 | $ 800 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 0 | $ 500 | $ 0 | $ 0 | $ 500 | $ 0 | $ 0 |
Rent | $1,000 | $1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 |
Telephone/Fax | $ 0 | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 |
Professional Services | $ 0 | $2,250 | $ 2,250 | $ 250 | $ 250 | $ 250 | $ 250 |
Business Insurance | $1,500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 0 | $ 471 | $ 471 | $ 1,255 | $ 1,255 | $ 1,412 | $ 1,412 |
Miscellaneous Charges | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 |
Office Furniture | $1,618 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $4,966 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Payment on Operating Loan | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Interest on Loan | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage and Accounts | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 | $ 150 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $20,000 |
Net Cash Flow (Deficiency) | $-23,915 | $-10,183 | $5,646 | $-4,179 | $7,470 | $1,407 | $-4,744 |
Beginning Cash Balance (note 21) | $63,314 | $39,398 | $29,216 | $34,862 | $30,683 | $38,153 | $39,560 |
The remaining five (5) months of J&B's first year Forecasted Cashflow Statement is presented below. Recall this is not the correct format - the first year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 10% | 10% | 10% | 10% | 10% | 100% |
Total Unit Sales/ Month) | 788 | 788 | 788 | 788 | 788 | 7,882 |
Diskette Sales (note 26) | 473 | 473 | 473 | 473 | 473 | 4729 |
CD Sales (note 26) | 276 | 276 | 276 | 276 | 276 | 2,759 |
Internet Sales (note 26) | 39 | 39 | 39 | 39 | 39 | 394 |
Weighed Average Selling Price (note 1) | $73.89 | $73.89 | $73.89 | $73.89 | $73.89 | |
Cash From Product Sales (100%) | $58,240 | $58,240 | $58,240 | $58,240 | $58,240 | $582,401 |
Less: Bad Debt Expense (1%) | $ 582 | $ 582 | $ 582 | $ 582 | $ 582 | $ 5,824 |
Purchase of Diskettes (note 27 a) | $ 0 | $13,005 | $ 0 | $ 8,670 | $ 0 | $47,658 |
Purchase of CD (note 27 b) | $ 0 | $ 2,500 | $ 0 | $ 0 | $ 2,500 | $ 10,000 |
Credit Card Charges (note 27 c) | $2,924 | $ 2,924 | $ 2,924 | $ 2,924 | $ 2,924 | $ 29,242 |
Packaging Charges (note 27 d) | $ 434 | $ 434 | $ 434 | $ 434 | $ 434 | $ 4,343 |
Actual Shipping Charges (note 27 e) | $2,120 | $ 2,120 | $ 2,120 | $ 2,120 | $ 2,120 | $ 21,199 |
Toll Free Charges (note 27 f) | $1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 14,117 |
Commission on Sales (note 27 g) | $ 788 | $ 788 | $ 788 | $ 788 | $ 788 | $ 7,094 |
Product Miscellaneous (note 27 h) | $ 394 | $ 394 | $ 394 | $ 394 | $ 394 | $ 3,941 |
Advertising | $12,000 | $12,000 | $12,000 | $12,000 | $12,000 | $130,000 |
Wages & Employee Benefits | $10,857 | $10,857 | $10,857 | $10,857 | $10,857 | $121,291 |
Research & Development | $8,240 | $8,240 | $ 8,240 | $ 8,240 | $ 8,240 | $ 98,271 |
Casual Labour | $ 800 | $ 0 | $ 0 | $ 0 | $ 800 | $ 2,400 |
Office Supplies | $ 500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Rent | $1,000 | $1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 12,000 |
Telephone/Fax | $ 300 | $ 300 | $ 300 | $ 300 | $ 300 | $ 3,300 |
Professional Services | $ 250 | $ 250 | $ 250 | $ 250 | $ 250 | $ 6,750 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Toll-free Charges above Variable | $1,569 | $1,569 | $ 1,569 | $ 1,569 | $ 1,569 | $ 14,117 |
Miscellaneous Charges | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | $ 2,400 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,618 |
Office Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 4,966 |
Payment on Operating Loan | $20,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 20,000 |
Interest on Loan | $ 2,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2,000 |
Internet Storage and Accounts | $ 900 | $ 150 | $ 150 | $ 150 | $ 150 | $ 2,550 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 20,000 |
Net Cash Flow (Deficiency) | $(9,187) | $ (642) | $14,863 | $ 6,193 | $11,563 | |
Plus Beginning Cash Balance (note 21) | $34,816 | $25,629 | $24,988 | $39,851 | $46,044 | |
* Numbers are rounded. |
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Percentage of Sales (per month) | 8% | 7% | 7% | 8% | 8% | 10% | 9% |
Total Unit Sales/ Month) | 793 | 693 | 693 | 793 | 793 | 991 | 892 |
Diskette Sales (note 26) | 317 | 277 | 277 | 317 | 317 | 396 | 357 |
CD Sales (note 26) | 396 | 347 | 347 | 396 | 396 | 495 | 446 |
Internet Sales (note 26) | 79 | 69 | 69 | 79 | 79 | 99 | 89 |
Weighed Average Selling Price (1) | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 | $68.01 |
Product Cost Inflation Rate | 5% | 5% | 5% | 5% | 5% | 5% | 5% |
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Cash From Product Sales (100%) | $53,902 | $47,164 | $47,164 | $53,902 | $53,902 | $67,378 | $60,640 |
Less: Bad Debt Expense (1%) | $ 539 | $ 472 | $ 472 | $ 539 | $ 539 | $ 674 | $ 606 |
Purchase of Diskettes (note 27 a) | $ 0 | $ 9,100 | $ 0 | $ 0 | $ 9,100 | $ 0 | $ 0 |
Purchase of CD (note 27 b) | $ 0 | $ 0 | $ 2,630 | $ 0 | $ 0 | $ 3,945 | $ 0 |
Credit Card Charges (note 27 c) | $ 2,726 | $ 2,386 | $ 2,386 | $ 2,726 | $ 2,726 | $ 3,408 | $ 3,067 |
Packaging Charges (note 27 d) | $ 435 | $ 381 | $ 381 | $ 435 | $ 435 | $ 544 | $ 490 |
Actual Shipping Charges (note 27 e) | $ 1,752 | $ 1,533 | $ 1,533 | $ 1,752 | $ 1,752 | $ 2,190 | $ 1,971 |
Toll Free Charges (note 27 f) | $ 1,569 | $ 1,656 | $ 1,449 | $ 1,449 | $ 1,656 | $ 1,656 | $ 2,071 |
Commission on Sales (note 27 g) | $ 788 | $ 832 | $ 728 | $ 728 | $ 832 | $ 832 | $ 1,040 |
Product Miscellaneous (note 27 h) | $ 420 | $ 368 | $ 368 | $ 420 | $ 420 | $ 525 | $ 473 |
Advertising | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 |
Wages & Employee Benefits | $11,298 | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 |
Research & Development | $ 9,850 | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 |
Casual Labour | $ 750 | $ 0 | $ 0 | $ 750 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 500 | $ 0 | $ 0 | $ 488 | $ 0 | $ 488 | $ 0 |
Rent | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 |
Telephone/Fax | $ 300 | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 |
Professional Services | $ 250 | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 |
Business Insurance | $ 1,650 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 1,569 | $ 1,656 | $ 1,449 | $ 1,449 | $ 1,656 | $ 1,656 | $ 2,071 |
Miscellaneous Charges | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 |
Taxes Payable | $29,698 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Furniture | $ 1,500 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $ 5,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage & Accounts | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 | $ 160 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $25,000 |
Net Cash Flow (Deficiency) | $-30,618 | $ -7,269 | $ - 281 | $ 7,115 | $ -1,265 | $15,410 | $-12,198 |
Plus Beginning Cash Balance | $57,608 | $26,989 | $19,721 | $19,440 | $26,555 | $25,290 | $40,700 |
The remaining five (5) months of J&B's second year Forecasted Cashflow Statement is presented below. Recall this is not the correct format - the second year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 8% | 7% | 10% | 9% | 9% | 100% |
Total Unit Sales/ Month) | 793 | 693 | 991 | 892 | 892 | 9,907 |
Diskette Sales (note 26) | 317 | 277 | 396 | 357 | 357 | 3,963 |
CD Sales (note 26) | 396 | 347 | 495 | 446 | 446 | 4,954 |
Internet Sales (note 26) | 79 | 69 | 99 | 89 | 89 | 991 |
Weighed Average Selling Price (note 1) | 68.01 | 68.01 | 68.01 | $68.01 | $68.01 | |
Product Cost Inflation Rate | 5% | 5% | 5% | 5% | 5% | |
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Cash From Product Sales (100%) | $53,902 | $47,164 | $67,378 | $60,640 | $60,640 | $673,775 |
Less: Bad Debt Expense (1%) | $ 539 | $ 472 | $ 674 | $ 606 | $ 606 | $ 6,738 |
Purchase of Diskettes (note 27 a) | $ 9,100 | $ 0 | $ 0 | $ 4,550 | $ 0 | $ 31,850 |
Purchase of CD (note 27 b) | $ 0 | $ 2,630 | $ 0 | $ 0 | $ 2,630 | $ 11,835 |
Credit Card Charges (note 27 c) | $ 2,726 | $ 2,386 | $ 3,408 | $ 3,067 | $ 3,067 | $ 34,080 |
Packaging Charges (note 27 d) | $ 435 | $ 381 | $ 544 | $ 490 | $ 490 | $ 5,439 |
Actual Shipping Charges (note 27 e) | $ 1,752 | $ 1,533 | $ 2,190 | $ 1,971 | $ 1,971 | $ 21,904 |
Toll Free Charges (note 27 f) | $ 1,864 | $ 1,656 | $ 1,449 | $ 2,071 | $ 1,864 | $ 20,411 |
Commission on Sales (note 27 g) | $ 936 | $ 832 | $ 728 | $ 1,040 | $ 936 | $ 10,254 |
Product Miscellaneous (note 27 h) | $ 420 | $ 368 | $ 525 | $ 473 | $ 473 | $ 5,251 |
Advertising | $12,500 | $12,500 | $12,500 | $12,500 | $12,500 | $150,000 |
Wages & Employee Benefits | $11,346 | $11,346 | $11,346 | $11,346 | $11,346 | $136,104 |
Research & Development | $10,165 | $10,165 | $10,165 | $10,165 | $10,165 | $121,662 |
Casual Labour | $ 750 | $ 0 | $ 0 | $ 0 | $ 750 | $ 3,000 |
Office Supplies | $ 0 | $ 488 | $ 0 | $ 0 | $ 488 | $ 2,450 |
Rent | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 1,050 | $ 12,600 |
Telephone/Fax | $ 320 | $ 320 | $ 320 | $ 320 | $ 320 | $ 3,820 |
Professional Services | $ 292 | $ 292 | $ 292 | $ 292 | $ 292 | $ 3,458 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,650 |
Toll-free Charges above variable | $ 1,864 | $ 1,656 | $ 1,449 | $ 2,071 | $ 1,864 | $ 20,411 |
Miscellaneous | $ 217 | $ 217 | $ 217 | $ 217 | $ 217 | $ 2,600 |
Taxes Payable | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 29,698 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,500 |
Computer Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 5,000 |
Internet Storage & Accounts | $ 940 | $ 160 | $ 160 | $ 160 | $ 160 | $ 2,700 |
Dividends Paid | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 25,000 |
Net Cash Flow (Deficiency) | $-3,313 | $-1,286 | $20,360 | $ 8,252 | $ 9,453 | |
Plus: Beginning Cash Balance | $28,502 | $25,189 | $23,903 | $44,263 | $52,515 | |
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Percentage of Total Sales (per month) | 8% | 7% | 7% | 8% | 8% | 10% | 9% |
Total Unit Sales/ Month) | 928 | 812 | 812 | 928 | 928 | 1,160 | 1,044 |
Diskette Sales (note 26) | 186 | 162 | 162 | 186 | 186 | 232 | 209 |
CD Sales (note 26) | 603 | 528 | 528 | 603 | 603 | 754 | 679 |
Internet Sales (note 26) | 139 | 122 | 122 | 139 | 139 | 174 | 157 |
Weighed Average Selling Price ( 1) | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 |
Product Cost Inflation Rate | 10% | 10% | 10% | 10% | 10% | 10% | 10% |
Cash From Product Sales (100%) | $62,753 | $54,909 | $54,909 | $62,753 | $62,753 | $78,441 | $70,597 |
Less: Bad Debt Expense (1%) | $ 628 | $ 549 | $ 549 | $ 628 | $ 628 | $ 784 | $ 706 |
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Purchase of Diskettes (note 27 a) | $ 0 | $ 9,540 | $ 0 | $ 0 | $ 0 | $ 0 | $ 9,540 |
Purchase of CD (note 27 b) | $ 0 | $ 5,500 | $ 0 | $ 0 | $ 5,500 | $ 0 | $ 0 |
Credit Card Charges (note 27 c) | $ 3,193 | $ 2,794 | $ 2,794 | $ 3,193 | $ 3,193 | $ 3,991 | $ 3,592 |
Packaging Charges (note 27 d) | $ 505 | $ 442 | $ 442 | $ 505 | $ 505 | $ 631 | $ 568 |
Actual Shipping Charges (note 27 e) | $ 1,554 | $ 1,360 | $ 1,360 | $ 1,554 | $ 1,554 | $ 1,943 | $ 1,748 |
Toll Free Charges (note 27 f) | $ 1,863 | $ 2,033 | $ 1,779 | $ 1,779 | $ 2,033 | $ 2,033 | $ 2,541 |
Commission on Sales (note 27 g) | $ 936 | $ 1,021 | $ 893 | $ 893 | $ 1,021 | $ 1,021 | $ 1,276 |
Product Miscellaneous (note 27 h) | $ 510 | $ 447 | $ 447 | $ 510 | $ 510 | $ 638 | $ 574 |
Advertising | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 |
Wages & Employee Benefits | $13,694 | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 |
Research & Development | $10,425 | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 |
Casual Labour | $ 900 | $ 0 | $ 0 | $ 900 | $ 0 | $ 0 | $ 0 |
Office Supplies | $ 0 | $ 0 | $ 412 | $ 0 | $ 0 | $ 412 | $ 0 |
Rent | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 |
Telephone/Fax | $ 320 | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 |
Professional Services | $ 292 | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 |
Business Insurance | $ 1,815 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Toll-free Charges above Variable | $ 1,864 | $ 2,033 | $ 1,779 | $ 1,779 | $ 2,033 | $ 2,033 | $ 2,541 |
Miscellaneous Charges | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 |
Taxes Payable | $31,728 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Furniture | $ 0 | $ 2,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Office Equipment | $ 0 | $ 8,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Internet Storage & Accounts | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 | $ 170 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $30,000 |
Net Cash Flow (Deficiency) | $-23,145 | $-21,560 | $3,704 | $10,261 | $ 5,026 | $24,204 | $-23,241 |
Plus Beginning Cash Balance | $61,968 | $38,823 | $17,263 | $20,967 | $31,228 | $36,254 | $60,457 |
The remaining five (5) months of J&B's third year Forecasted Cashflow Statement is presented below. Recall this is not the correct procedure - the third year cashflow statement should be developed in a spreadsheet program and should appear on one page.
Percentage of Total Sales (per month) | 8% | 7% | 10% | 9% | 9% | 100% |
Total Unit Sales/ Month) | 928 | 812 | 1,160 | 1044 | 1044 | 11,602 |
Diskette Sales (note 26) | 186 | 162 | 232 | 209 | 209 | 2320 |
CD Sales (note 26) | 603 | 528 | 754 | 679 | 679 | 7541 |
Internet Sales (note 26) | 139 | 122 | 174 | 157 | 157 | 1740 |
Weighed Average Selling Price (note 1) | $67.61 | $67.61 | $67.61 | $67.61 | $67.61 | |
Product Cost Inflation Rate | 10% | 10% | 10% | 10% | 10% | |
Cash From Product Sales (100%) | $62,753 | $54,909 | $78,441 | $70,597 | $70,597 | $784,411 |
Bad Debt Expense (1%) | $ 628 | $ 549 | $ 784 | $ 706 | $ 706 | $ 7,844 |
Purchase of Diskettes (note 27 a) | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,908 | $ 20,988 |
Purchase of CD (note 27 b) | $ 5,500 | $ 0 | $ 0 | $ 4,125 | $ 0 | $ 20,625 |
Credit Card Charges (note 27 c) | $ 3,193 | $ 2,794 | $ 3,991 | $ 3,592 | $ 3,592 | $ 39,911 |
Packaging Charges (note 27 d) | $ 505 | $ 442 | $ 631 | $ 568 | $ 568 | $ 6,311 |
Actual Shipping Charges (note 27 e) | $ 1,554 | $ 1,360 | $ 1,943 | $ 1,748 | $ 1,748 | $ 19,428 |
Toll Free Charges (note 27 f) | $ 2,287 | $ 2,033 | $ 1,779 | $ 2,541 | $ 2,287 | $ 24,985 |
Commission on Sales (note 27 g) | $ 1,149 | $ 1,021 | $ 893 | $ 1,276 | $ 1,149 | $ 12,550 |
Product Miscellaneous (note 27 h) | $ 510 | $ 447 | $ 638 | $ 574 | $ 574 | $ 6,381 |
Advertising | $14,167 | $14,167 | $14,167 | $14,167 | $14,167 | $170,000 |
Wages & Employee Benefits | $13,952 | $13,952 | $13,952 | $13,952 | $13,952 | $167,163 |
Research & Development | $10,453 | $10,453 | $10,453 | $10,453 | $10,453 | $125,411 |
Casual Labour | $ 900 | $ 0 | $ 0 | $ 0 | $ 900 | $ 3,600 |
Office Supplies | $ 0 | $ 412 | $ 0 | $ 0 | $ 412 | $ 1,650 |
Rent | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 1,102 | $ 13,230 |
Telephone/Fax | $ 340 | $ 340 | $ 340 | $ 340 | $ 340 | $ 4,060 |
Professional Services | $ 333 | $ 333 | $ 333 | $ 333 | $ 333 | $ 3,958 |
Business Insurance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,815 |
Toll-free Charges above Variable | $ 2,287 | $ 2,033 | $ 1,779 | $ 2,541 | $ 2,287 | $ 24,985 |
Miscellaneous Charges | $ 233 | $ 233 | $ 233 | $ 233 | $ 233 | $ 2,800 |
Taxes Payable | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 31,728 |
Office Furniture | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2,000 |
Office Equipment | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 8,000 |
Internet Storage & Accounts | $ 995 | $ 170 | $ 170 | $ 170 | $ 170 | $ 2,865 |
Dividends Paid (note 28) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 30,000 |
Net Cash Flow (Deficiency) | $2,665 | $3,068 | $25,252 | $12,174 | $13,715 | |
Plus: Beginning Cash Balance | $37,217 | $39,882 | $42,949 | $68,202 | $80,376 | |
As you can see, the above forecasted cash flow statements project J&B's cash inflows (from customers, from a bank loan and investors) and all expected cash outflow (from purchases of inventory, for advertising, for rent etc,) each month for thirty-six months. The inflows and outflows are subtracted and the difference is known as the Net Cash Flow (Deficiency). The cash at the beginning of the month is then added to the Net Cash Flow (Deficiency) to produce the Ending Cash Balance for the month.
Notice at the beginning of each cash flow statement, an ASSUMPTION section has been used. This assists the reader (investor) in understanding how the entrepreneur arrived at various values throughout the Cash Flow Statement (optional).
Also notice, after some of the account items, a note and a number is stated. These numbers refer to the Notes to the Financial Statements and allows readers (investors) the opportunity to see how J&B arrived at each account balance or value. This will become more apparent later on as we discuss Part C of the Financial Plan entitled "Notes to the Forecasted Financial Statements".
We can not stress enough that you should have three cash flow statements; one for each forecasted year. In addition, each cash flow statement will consist of a twelve month forecasted period; for a total of thirty-six months.
This concludes our discussion on how your forecasted cash flow statement should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the cash flow statement before attempting to forecast your own. To learn more about this statement, please refer to the section entitled " The Cash-Flow Statement ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
4. FORECASTED BREAK-EVEN ANALYSIS
The next analysis to appear in your financial plan is the Forecasted Break-even Analysis. A Break Even Analysis, in its simplest form, is a tool used to determine the level of sales a business must earn in order to achieve neither a profit nor a loss. In other words, the point at which a business' Net Income is ZERO (revenues - expenses = 0).
The break-even analysis focuses mainly on the items included in a company's income statement (revenues and expenses). Moreover, the Break-even Analysis relies on your forecasted Fixed Costs, your forecasted Variable Costs and your forecasted Selling Price(s). Forecasted Fixed Costs are costs and expenses that do not fluctuate with sales increases or decreases. Forecasted Variable Costs are costs and expenses that do fluctuate with sales increases or decreases. A Forecasted Selling Price (s) is the price or prices you plan to sell your product at.
Your Forecasted Break-even analysis can consist of one page or two pages; depending upon how much detail you decide to offer. For example, J&B Incorporated's forecasted break-even analysis, presented below, consists of two parts. PART A. provides the reader with all information required in making the break-even calculation, and PART B shows the actual break-even calculation.
Selling Price per unit (note 1) | $73.89 | $68.01 | $67.61 |
Weighted Average Variable Cost per unit | $16.50 | $14.79 | $12.10 |
Advertising Expense (note 3) | $130,000 | $150,000 | $170,000 |
Wages & Employee Benefits (note 4) | $122,366 | $136,153 | $167,421 |
Casual Labor (note 5) | $ 2,400 | $ 3,000 | $ 3,600 |
Office Supplies (note 6) | $ 1,500 | $ 1,715 | $ 1,908 |
Rent Expense (note 7) | $ 12,000 | $ 12,600 | $ 13,230 |
Telephone/Fax Expense (note 8) | $ 3,600 | $ 3,840 | $ 4,080 |
Professional Services (note 9) | $ 7,000 | $ 3,500 | $ 4,000 |
Insurance Expenses (note 10) | $ 1,500 | $ 1,650 | $ 1,815 |
Toll-free Charges above Variable Cost (note 11) | $ 15,685 | $ 20,706 | $ 25,408 |
Bad Debt Expense (note 12) | $ 5,824 | $ 6,738 | $ 7,844 |
Interest on Operating Loan (note 13) | $ 2,000 | $ nil | $ nil |
Internet Storage & Accounts Expense (note 14) | $ 2,550 | $ 2,700 | $ 2,865 |
Miscellaneous Expenses (note 15) | $ 2,400 | $ 2,600 | $ 2,800 |
Depreciation Expense - Equipment (note 16) | $ 3,142 | $ 4,392 | $ 6,392 |
Depreciation Expense- Furniture (note 17) | $ 606 | $ 906 | $ 1,306 |
Amortization of Initial Development Costs (note 18) | $ 15,924 | $ 15,924 | $ 15,924 |
Amortization of Future Development Costs (note 19) | $ 24,720 | $ 55,215 | $ 86,575 |
Forecasted Sales in units per year | = | 7,882 units | 9,907 units | 11,602 units |
Forecasted Sales above Break-even | = | 1,727 units | 1,984 units | 2,321 units |
J&B is forecasting sales of 1,727 units above its break-even point in year one, 1,984 units above break-even in year two and 2,321 units above break-even in year three. |
In the above example, notice that J&B calculates its break-even point and provides an indication of how many units it plans to sell above its break-even point. To do this, J&B simply subtracts each years' forecasted break-even point from the number units it plans to sell in each forecasted year.
Also notice, J&B provides readers with all figures needed to calculate the break-even point. You may elect to use this format or you may decide to only provide the break-even calculations. Whichever format you decide, be sure your break-even point is calculated over a three year period - one column for each forecasted year. You may also decide to provide the reader with an explanation on why your forecasted break-even point is increasing or decreasing. For example, J&B's break-even point is increasing due to the company's planned decrease in its selling price, its estimated increase in variable costs, and its planned increase in fixed costs. As a result, the company is earning a lower contribution margin on each sale made during year two and three. Thus less "money" is contributing to their higher fixed costs.
This concludes our discussion on how your projected break-even analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the break-even analysis before attempting to forecast your own. To learn more about this financial analysis, please refer to the section entitled " The Break-even Analysis ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
5. SENSITIVITY ANALYSIS
A sensitivity analysis shows the effects on Net Income when forecasted sales are increased or decreased by various percentages. Since your forecasted sales will NEVER be one hundred percent accurate, the sensitivity analysis shows investors how your net income will change if your original sales forecast increases by 30%, 20% and 15% or if your original sales forecast decreases and a 15% or 20 %, for example. The percentages chosen for your sensitivity analysis is up to you, however, avoid percentages of 14% or lower.
Many entrepreneurs develop only one sensitivity analysis ( for their first year operation). Others develop three sensitivity analysis; one for each forecasted year of operation. Whichever format you plan to use is not important, what is important, however, is that you include this analysis in your business plan. It shows the investor that you understand; 1) the forecasting process and 2)that your original sales forecasts generally do NOT materialize as envisioned.
Like Break-even Analysis, the Sensitivity Analysis uses your forecasted income statement as its starting point. The analysis relies on distinguishing between Forecasted Fixed Costs and Forecasted Variable Costs. Recall, Forecasted Fixed Costs are costs and expenses that do not fluctuate with sales increases or decreases. Forecasted Variable Costs are costs and expenses that do fluctuate with sales increases or decreases.
Below provides an example of J&B's sensitivity analysis for its first forecasted year of operations. Notice, J&B has chosen a sales percentage increase of 15% of its original sales forecast and a sales percentage decrease of 20% of its original sales forecast.
| | | |
Sales in Units (note 1) | 6,306 units | 7,882 units | 9,064 units |
Weighted Average Selling Price (note 1) | $73.89 | $73.89 | $73.89 |
Cost of Goods Sold (note 2) | $104,153 | $130,191 | $149,720 |
: | |||
Advertising Expense | $130,000 | $130,000 | $130,000 |
Wages & Employee Benefits | $122,366 | $122,366 | $122,366 |
Casual Labor | $ 2,400 | $ 2,400 | $ 2,400 |
Office Supplies | $ 1,500 | $ 1,500 | $ 1,500 |
Rent Expense | $ 12,000 | $ 12,000 | $ 12,000 |
Telephone/Fax Expense | $ 3,600 | $ 3,600 | $ 3,600 |
Professional Services | $ 7,000 | $ 7,000 | $ 7,000 |
Insurance Expenses | $ 1,500 | $ 1,500 | $ 1,500 |
Toll-free above Variable | $ 15,685 | $ 15,685 | $ 15,685 |
Bad Debt Expense (note 12) | $ 5,824 | $ 5,824 | $ 5,824 |
Interest on Operating Loan | $ 2,000 | $ 2,000 | $ 2,000 |
Internet Storage & Accounts | $ 2,550 | $ 2,550 | $ 2,550 |
Miscellaneous Expenses | $ 2,400 | $ 2,400 | $ 2,400 |
Depreciation Exp. - Equipment | $ 3,142 | $ 3,142 | $ 3,142 |
Depreciation Exp.- Furniture | $ 606 | $ 606 | $ 606 |
Amortization of Initial R&D Costs | $ 15,924 | $ 15,924 | $ 15,924 |
Amortization of Future R&D Costs | $ 24,720 | $ 24,720 | $ 24,720 |
Net Income Before Taxes | $ 8,579 | $ 98,992 | $166,801 |
Less: Estimated Tax Rate (30%) | $ 2,574 | $ 29,698 | $ 50,040 |
* All Operating Expenses are considered Fixed Costs. ** The only Variable Cost is J&B's Cost of Goods Sold. *** Figures are rounded. |
Notice, J&B's forecasted Operating Expenses are considered to be Fixed Costs (they do not fluctuate with sales increases or decreases. Also, the company's Variable Costs, in this example, include only the Cost of Goods Sold (COGS will always fluctuate with sales increases or decreases and therefore will always be considered variable). The only other item, in the above example, that fluctuates with sales is Sales itself! In other words, if you increase the original forecasted sales by a certain percentage, then sales will have to increase by that amount (in units sold and in dollars). Alternatively if you decrease the original sales forecast by any amount, then SALES in units sold and in dollar will certainly change by that amount or percentage.
This concludes our discussion on how your projected sensitivity analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the sensitivity analysis before attempting to forecast your own. To learn more about this financial analysis, please refer to the section entitled " The Sensitivity Analysis ". When you understand the theory behind each financial statement and analysis, you will be equipped with the tools necessary tools needed in Forecasting Your Own Forecasted Financial Statements .
6. RATIO ANALYSIS
The next analysis appearing in the financial plan should be your Forecasted Ratio Analysis. In a nutshell, Ratio Analysis is a general technique for analyzing the performance of an existing or potential business.
Ratios involve dividing numbers from the Balance Sheet and Income Statement to create percentages and decimals. When aspiring entrepreneurs and existing business owners apply for a loan, for example, bankers usually look at their forecasted ratios and compare them to ratios of other businesses operating within the same industry.
Your projected ratios should be calculated over a three year forecasted period. Many business plan writers calculate the ratios and provide a narrative discussion, depicting how each has changed over the three year forecasted period. Others calculate the ratios and provide a footnote stating "a complete analysis regarding the forecasted ratios is available upon request. Yet other business plan writers feel the need to calculate various ratios and compare them to ratios of other businesses within the industry. The later approach can be time consuming and may not be "cost effective". Below provides an example of J&B's forecasted Ratio Calculations.
Current Assets Current Liabilities | = | $67,894 $36,359 | $67578 $39051 | $98410 $43649 |
Current Assets -Current Liabilities Current Liabilities | = | $31,535 $36,359 | $28,526 $39,051 | $54,761 $43,649 |
Total Debt Total Assets | = | $36,359 $185,753 | $39,051 $237,477 | $43,649 $293,553 |
: | ||||
Total Debt Total Equity | = | $ 36,359 $149,394 | $ 39,051 $198,426 | $ 43,649 $249,904 |
: | ||||
Net Income after tax Sales | = | $ 69,294 $582,401 | $ 74,032 $673,775 | $81,478 $78,441 |
: | ||||
Net Income after tax Total Equity | = | $ 69,294 $149,394 | $ 74,032 $198,426 | $ 81,478 $249,904 |
NOTE: Complete analysis on above ratios is available upon request . |
Notice the information provided in the above example. The name of each ratio, the formula required in calculating each ratio, the dollar amounts for each formula item, and the ratio calculation for each of the forecasted years. It is important to stress that these dollar amounts have been taking from J&B's forecasted Balance Sheet and Forecasted Income Statement. Therefore, the forecasted balance sheet and income statement must be complete before ratios can be calculated.
Also notice that J&B decided to calculate the ratios without providing any narrative discussion. Moreover, the company states that a "complete analysis is available upon request". If you want to impress the investor, it might in your best interest to provide the ratio analysis (narrative discussion) in your business plan. To do this, simply calculate each ratio for the three year forecasted period and then briefly discuss the variables attributing to change in ratio value.
This concludes our discussion on how your projected ratio analysis should appear in your Financial Plan. Remember, it is imperative to understand the theory behind the ratio analysis before attempting to forecast your own. To learn more about how to read or determine the meaning behind ratios, please refer to the section entitled " Ratio Analysis ". This section will also provide you with other ratio formulas which you may decide to include in your analysis.
This concludes PART B of the financial plan entitled "Forecasted Financial Statements".The purpose of this section was not to show you how to develop forecasted financial statements, rather the purpose was to show you how the statements generally appear in the Financial Plan.
To learn the theory behind each financial statement, please refer to the section entitled " Learning and Understanding Financial Statements ". To learn how to forecast your own financial statements, please refer to the section entitled " Forecasting your Own Financial Statements ".
In summary, be sure your forecasted financial statements and analysis provide for a three year forecasted period and include the following;
Forecasted Income Statements | all on one page |
Forecasted Balance Sheets | all on one page |
Forecasted Cash Flow Statements | one page for each cash flow statement |
Break-even Analysis | Calculations on one page, analysis is unlimited |
Sensitivity Analysis | One page for each sensitivity, analysis is unlimited |
Ratio Analysis | on one to three pages depending upon your format |
Please Note: as mentioned earlier, you will save yourself time and money if you develop the above financial items using a spreadsheet program.
PART C - NOTES TO THE FINANCIAL STATEMENTS
The third and final part of the financial section of the Business Plan is known as the notes to the forecasted financial statements. Notes to the Forecasted Financial Statements summarize the "activities" and "assumptions" made when creating the forecasted financial statements.. The Notes will give the readers (bankers, investors, and other readers) the necessary information needed to understand and comprehend your forecasts and projections. It also alleviates any guessing or questioning a reader may have when analyzing the financial section of the business plan. NOTE: never, ever, ever, create the notes to the forecasted financial statements until you have" fully completed" all forecasted statements and analysis.
There is no set structure nor specific guideline that dictate which topics should be included in the notes to the financial statements. Rather it is left up to the individual to decide which items warrant a "note" and which items are self explanatory. The following list provides some suggestions you may use when creating your notes section.
Sales Forecast note to the financial statements |
Gross Margin note to the financial statements |
Management and Staff note to the financial statements |
Office or Store Supplies note to the financial statements |
Bad Debt Expense Rate note to the financial statements |
Marketing Expenses Breakdown note to the financial statements |
Income Tax Rate notes to the financial statements |
Income Tax Payable note to the financial statements |
Net Income note to the financial statements |
Accounts Receivable note to the financial statements |
Personal Assets Invested by the Owner note to financial statements |
Fixed Asset Purchases note to the financial statements |
Total Fixed Assets Available note to the financial statements |
Deprecation Rates on Fixed Assets note to the financial statements |
Inventory note to the financial statements |
Accounts Payable note to the financial statements |
Short-term Loans note to the financial statements |
Long-term Debt (mortgage) note to the financial statements |
Sales Tax note to the financial statements |
Owner (s)Capital Account note to the financial statements |
Retained Earnings note to the financial statements |
Dividend Distribution note to the financial statements |
Your notes should provide details on each of the required three year forecasted periods. Below provides a link to J&B's Notes to the Forecasted Financial Statements. BUT FIRST - recall from above, the word "note" and a "number" followed several account items on J&B's forecasted income statement, balance sheet and cash flow statement, etc. For instance, on the company's income statement, an account called revenue from sales is present. Following the revenue from sales account is a "note 1". This refers to the first note under the Notes to the Forecasted Financial Statements. When investors read J&B's income statement and see note 1 beside the account item entitled "Total Revenue From Sales", they can quickly refer to the Notes section for information on how the entrepreneur arrived at these dollars amounts. As a result, the investor better understands the financial statements and the assumptions used when creating them. . Try is yourself - print off all J&B's financial statements and refer to the Notes below. You'll find your understanding of the financial statements as well as the company's initiatives is much better. Remember, when investors understand your financial projections, it reduces their risk, and in many cases, it increases your chances of receiving financing.
Link to: J&B Incorporated's Notes to their Forecasted Financial Statements
For additional information on this topic, please refer to the section entitled " Notes to the Financial Statements ".
CONCLUSION OF THE FINANCIAL PLAN
This concludes our discussion on the Financial Plan section of a business plan. Remember the Financial Plan generally consists of three parts:
The Introduction |
The Forecasted Financial Statements |
The Notes to the Forecasted Financial Statements |
Below provides examples of how your Financial Plan should appear in its entirety. (Please note, the financial statements and analysis for two of the examples below; namely The Internet Company and Scholarship Information Services provide forecasts for a two year period. Your financial statements and analysis, however, generally provide projections for at least a three year period.
EXAMPLES OF THE FINANCIAL PLAN SECTION OF A BUSINESS PLAN J&B Incorporated Scholarship Information Services The Internet Company
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This article is part of a series on how to write a great business plan .
Numbers tell the story. Bottom line results indicate the success or failure of any business.
Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical.
But most importantly, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do.
Most business plans include at least five basic reports or projections:
It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs. (A quick search like "google docs profit and loss statement" yields plenty of examples.)
Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so... but I'd first recommend playing around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers... and the best way to understand your numbers is usually to actually work with your numbers.
But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.
Then Financial Analysis can help you answer the most important business question: "Can we make a profit?"
Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:
Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. If one does want to dig deeper, fine--he or she can check out the documents in the Appendix.
That way your business plan can share your story clearly and concisely.
Otherwise, since you created your business plan... you should already have the backup.
And one last thing: always remember the goal of your business plan is to convince you that your idea makes sense--because it's your time, your money, and your effort on the line.
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Building a financial projection as you write out your business plan can help you forecast how much money your business will bring in.
Planning for the future, whether it’s with growth in mind or just staying the course, is central to being a business owner. Part of this planning effort is making financial projections of sales, expenses, and—if all goes well—profits.
Even if your business is a startup that has yet to open its doors, you can still make projections. Here’s how to prepare your business plan financial projections, so your company will thrive.
Business plan financial projections are a company’s estimates, or forecasts, of its financial performance at some point in the future. For existing businesses, draw on historical data to detail how your company expects metrics like revenue, expenses, profit, and cash flow to change over time.
Companies can create financial projections for any span of time, but typically they’re for between one and five years. Many companies revisit and amend these projections at least annually.
Creating financial projections is an important part of building a business plan . That’s because realistic estimates help company leaders set business goals, execute financial decisions, manage cash flow , identify areas for operational improvement, seek funding from investors, and more.
Financial forecasting serves as a useful tool for key stakeholders, both within and outside of the business. They often are used for:
Accurate financial projections can help a company establish growth targets and other goals . They’re also used to determine whether ideas like a new product line are financially feasible. Future financial estimates are helpful tools for business contingency planning, which involves considering the monetary impact of adverse events and worst-case scenarios. They also provide a benchmark: If revenue is falling short of projections, for example, the company may need changes to keep business operations on track.
Projections may reveal potential problems—say, unexpected operating expenses that exceed cash inflows. A negative cash flow projection may suggest the business needs to secure funding through outside investments or bank loans, increase sales, improve margins, or cut costs.
When potential investors consider putting their money into a venture, they want a return on that investment. Business projections are a key tool they will use to make that decision. The projections can figure in establishing the valuation of your business, equity stakes, plans for an exit, and more. Investors may also use your projections to ensure that the business is meeting goals and benchmarks.
Lenders rely on financial projections to determine whether to extend a business loan to your company. They’ll want to see historical financial data like cash flow statements, your balance sheet , and other financial statements—but they’ll also look very closely at your multi-year financial projections. Good candidates can receive higher loan amounts with lower interest rates or more flexible payment plans.
Lenders may also use the estimated value of company assets to determine the collateral to secure the loan. Like investors, lenders typically refer to your projections over time to monitor progress and financial health.
Before sitting down to create projections, you’ll need to collect some data. Owners of an existing business can leverage three financial statements they likely already have: a balance sheet, an annual income statement , and a cash flow statement .
A new business, however, won’t have this historical data. So market research is crucial: Review competitors’ pricing strategies, scour research reports and market analysis , and scrutinize any other publicly available data that can help inform your projections. Beginning with conservative estimates and simple calculations can help you get started, and you can always add to the projections over time.
One business’s financial projections may be more detailed than another’s, but the forecasts typically rely on and include the following:
True to its name, a cash flow statement shows the money coming into and going out of the business over time: cash outflows and inflows. Cash flows fall into three main categories:
Projected income statements, also known as projected profit and loss statements (P&Ls), forecast the company’s revenue and expenses for a given period.
Generally, this is a table with several line items for each category. Sales projections can include the sales forecast for each individual product or service (many companies break this down by month). Expenses are a similar setup: List your expected costs by category, including recurring expenses such as salaries and rent, as well as variable expenses for raw materials and transportation.
This exercise will also provide you with a net income projection, which is the difference between your revenue and expenses, including any taxes or interest payments. That number is a forecast of your profit or loss, hence why this document is often called a P&L.
A balance sheet shows a snapshot of your company’s financial position at a specific point in time. Three important elements are included as balance sheet items:
They’re called balance sheets because assets always equal liabilities plus shareholder equity.
The following five steps can help you break down the process of developing financial projections for your company:
The details of your projections may vary depending on their purpose. Are they for internal planning, pitching investors, or monitoring performance over time? Setting the time frame—monthly, quarterly, annually, or multi-year—will also inform the rest of the steps.
If available, gather historical financial statements, including balance sheets, cash flow statements, and annual income statements. New companies without this historical data may have to rely on market research, analyst reports, and industry benchmarks—all things that established companies also should use to support their assumptions.
Identify future spending based on direct costs of producing your goods and services ( cost of goods sold, or COGS) as well as operating expenses, including any recurring and one-time costs. Factor in expected changes in expenses, because this can evolve based on business growth, time in the market, and the launch of new products.
Project sales for each revenue stream, broken down by month. These projections may be based on historical data or market research, and they should account for anticipated or likely changes in market demand and pricing.
Now that you have projected expenses and revenue, you can plug that information into Shopify’s cash flow calculator and cash flow statement template . This information can also be used to forecast your income statement. In turn, these steps inform your calculations on the balance sheet, on which you’ll also account for any assets and liabilities .
What are the main components of a financial projection in a business plan.
Generally speaking, most financial forecasts include projections for income, balance sheet, and cash flow.
These two terms are often used interchangeably. Depending on the context, a financial forecast may refer to a more formal and detailed document—one that might include analysis and context for several financial metrics in a more complex financial model.
Not necessarily. Depending on factors like the age and size of your business, you may be able to prepare financial projections using a simple spreadsheet program. Large complicated businesses, however, usually use accounting software and other types of advanced data-management systems.
Projections are by nature based on human assumptions and, of course, humans can’t truly predict the future—even with the aid of computers and software programs. Financial projections are, at best, estimates based on the information available at the time—not ironclad guarantees of future performance.
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Creating your own business plan from scratch is exhausting. What is worse, the plan you create may not even deliver results in the way you expect it to!
This is a major pain point for all businesses, but SlideTeam has got news that resolves the difficulty for you. We have curated killer, best-in-class business plan templates that offer you both content and world-class design.
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This PPT Template is your key to strategic business management! This comprehensive slide deck empowers entrepreneurs with a structured approach to success. Craft a clear mission statement, define objectives, and articulate your pathway to success. The ownership section ensures clarity in responsibilities, fostering a cohesive team environment. However, the real game-changer lies in the financial summary, where you can present key metrics, forecasts, and performance indicators. Use this this slide to transform complex financial data into a roadmap for profitability. Whether you're a startup or an established business, this plan is designed for efficiency, ensuring that your mission aligns with tangible financial success. Elevate your business strategy, track your goals, and navigate the path to prosperity seamlessly with this essential tool. Download now and witness the transformation of your monthly planning into business growth.
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A strategic plan is essential for business survival, and this one-pager is crafted to ensure that. It showcases a concise company description, and a detailed worksheet that spotlights the senior management team's prowess. Effectively communicate your strengths, weaknesses, opportunities, and threats to put your best foot forward.
This strategic tool is meant for organizations of all sizes aiming for growth and meeting objectives. In the realm of financial planning, this one-pager is a game-changer, providing a comprehensive overview of budget estimations for individual costing heads. A crucial resource for firms, this template aids in avoiding unnecessary spending by serving as a ready reference. Featuring company overview, success factors, forecasted financial ratios, and a detailed financial planning process, this template equips businesses with insights. With sections covering planned vs actual expenses, project cash flow summary, starting cash flow analysis , and total revenue forecast, this template is a powerhouse for informed decision-making.
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Explore some of the best management summary templates here !
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The executive summary is the cornerstone of any business plan, serving as a gateway for readers to understand the essence of your proposal.
It summarizes the plan’s key points into a digestible format, making it crucial for capturing the interest of investors, partners, and stakeholders.
In this comprehensive guide, we’ll explore what the executive summary is, why we use it, and also how you can create one for your business plan. Let’s dive in!
An executive summary is a concise and compelling overview of a business plan (or simply a report), designed to provide readers, such as investors, partners, or upper management, with a quick and clear understanding of the document’s most critical aspects.
For a business plan, it summarizes the key points including the business overview , market analysis , strategy plan timeline and financial projections.
Typically, the executive summary is the first section of a business plan, but it should be written last to ensure it accurately reflects the content of the entire document.
The primary goal of an executive summary is to engage the reader’s interest and encourage them to read the full document.
It should be succinct, typically no more than one to two pages, and articulate enough to stand on its own, presenting the essence of the business proposal or report without requiring the reader to go through the entire document for basic understanding.
The executive summary plays a crucial role in whether a business plan opens doors to funding, partnerships, or other opportunities . It’s often the first (and sometimes the only) part of the plan that stakeholders read, making it essential for making a strong, positive first impression. As such, we use it in order to:
Here’s a streamlined approach to crafting an impactful executive summary:
Here are 2 examples you can use as an inspiration to create yours. These are taken from our coffee shop and hair salon business plan templates.
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Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.
Green Investments (GI) is a financial service company that focuses on stocks of environmentally responsible companies. The Washington-based L.L.C. is lead by Sarah Lewis and Steve Burke. GI uses financial research purchased from Bear Stearns and in-house environmental responsibility analysis to make recommendations to clients.
Services GI has developed a criteria-based marker system which is easy and effective in evaluating a wide range of different companies on their environmental impact. Only financially prudent/performing companies are evaluated, ensuring that its recommendations make both financial and environmental sense.
Competitive Edge GI will leverage the proprietory evaluation system to quickly gain market share. The system is convenient and based on extensive research, providing a streamlined overview of the environmental performance of the companies.
Market GI will concentrate on the unserved niche of environmental investing within the financial services market. GI faces indirect competition from environmentally responsible mutual funds, which do a similar job in assessing a company’s environmental performance but do not allow for investing in individual equity.
Management Team GI is lead by two experienced managers, Sarah Lewis, and Steve Burke. Sarah has a masters degree in environmental studies and has worked for the Environmental Protection Agency where she was responsible for preparing environmental impact statements. Steve has an MBA and has worked for Salomon Smith Barney where he developed an extensive amount of networking contacts.
GI addresses a previously ignored niche of the financial services market. GI will generate $230,000 and $261,000 in sales in year two and three respectively.
Green Investments’ mission is to become the premier financial service organization that makes investment in companies with outstanding environmental records and practices. Green Investments, through comprehensive research and well thought out and verifiable marker criteria will be able to identify sound environmental investments. By offering the highest level of services, Green Investments will succeed as a company as well as have a positive impact on our environment.
Green Investments is a Washington-based financial service company that is concentrating on the niche of environmentally responsible companies. The company is owned by Steve Burke and Sarah Lewis. It has been formed as a L.L.C.
The following equipment will be needed for start up:
Start-up | |
Requirements | |
Start-up Expenses | |
Legal | $5,000 |
Stationery etc. | $500 |
Brochures | $500 |
Licenses | $2,000 |
Insurance | $500 |
Research and Development | $9,000 |
Other | $2,500 |
Total Start-up Expenses | $20,000 |
Start-up Assets | |
Cash Required | $79,000 |
Other Current Assets | $7,000 |
Long-term Assets | $19,000 |
Total Assets | $105,000 |
Total Requirements | $125,000 |
Start-up Funding | |
Start-up Expenses to Fund | $20,000 |
Start-up Assets to Fund | $105,000 |
Total Funding Required | $125,000 |
Assets | |
Non-cash Assets from Start-up | $26,000 |
Cash Requirements from Start-up | $79,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $79,000 |
Total Assets | $105,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $0 |
Capital | |
Planned Investment | |
Investor 1 | $75,000 |
Investor 2 | $50,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $125,000 |
Loss at Start-up (Start-up Expenses) | ($20,000) |
Total Capital | $105,000 |
Total Capital and Liabilities | $105,000 |
Total Funding | $125,000 |
Steve Burke and Sarah Lewis equally own Green Investments. While they initially were going to create a S Corporation as the business formation, they decided to form as a L.L.C. as a means to avoid double taxation found with a corporation yet realizing the benefits of personal liability avoidance.
Green Investments is a financial service company that offers investment advice specifically for stocks. GI purchases fiscal performance research from Bear Stearns, one of the highest respected firms in the market. In addition to solid financial performance criteria, GI has developed a set of environmental markers by which it can analyze and grade the attractiveness of the environmental impact that a company has.
As mentioned earlier, the economic performance of a company is rated by the financial firm Bear Stearns. Green Investments purchases Bear Stearns research based on recognition that there is no value added to do this research. The confidence of the research is quite high because of the firm performing it. If Bear Stearns’ research or another firm of comparable quality was not available Green Investments would have to rethink the decision to farm out this research.
Green Investments has developed a comprehensive set of environmental markers for which a company and their environmental impact can be evaluated. The following areas are evaluated:
All of the markers include current, next stage, and long run benchmarks.
Green Investments takes the list of recommended investments from Bear Stearns and then applies environmental marker criteria to narrow the list down. The result is a list of possible investments (stocks) that are recommended because of their fiscal and environmental performance. Green Investments attempts to make evaluations of companies in a wide range of sectors allowing the customer to make the choice as to what type of company/industry that they would like to invest in.
Green Investments’ service charge is similar to a typical brokerage fee system based on a percentage. While Green Investments is a bit more expensive than other standard financial services companies because of the additional research required, the variance is not that material, particularly to customers that want good performing stocks but only want to invest with environmentally sound companies.
Several recent well respected studies indicate that “green” stocks are not inherently under performing. Actually it is just the reverse, companies that make decisions with environmental considerations in mind generally perform better.
Green Investments has identified two distinct groups of target customers. These two groups of customers are distinguished by their household wealth. They have been grouped as customers with <$1 million and >$1 million in household wealth. The main characteristic that makes both of these groups so attractive is their desire to make a difference in the world by making investment decisions that take into account environmental factors.
The financial services industry has many different niches. Some advisors provide general investment services. Others will only offer one type of investments, maybe just mutual funds or might concentrate on bonds. Other service providers will concentrate on a specific niche like technology or socially responsible companies.
Green Investments has segmented the target market into two distinct groups. The groups can be differentiated by their difference in household wealth, households of <$1 million and >$1 million.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
<$1 million worth customers | 8% | 1,232,000 | 1,330,560 | 1,437,005 | 1,551,965 | 1,676,122 | 8.00% |
>$1 million worth customers | 7% | 223,090 | 238,706 | 255,415 | 273,294 | 292,425 | 7.00% |
Total | 7.85% | 1,455,090 | 1,569,266 | 1,692,420 | 1,825,259 | 1,968,547 | 7.85% |
Green Investments has chosen the previously mentioned target market segments because of the ideological beliefs and the fact that these beliefs translate into the customer groups needing services that Green Investments can provide. While the people can always purchase shares of an environmentally responsible mutual fund, a way that they can exercise their beliefs, mutual funds are just one type of investments. The downside of investments are their relatively low rate of return (relative to good stocks) and the inability to receive personalized service and the ability to make custom choices beyond the type of mutual fund.
Therefore, Green Investments has chosen these specific customer segments because it is a market group that has unmet needs. These groups have the money and willingness for an environmental investment, yet their only current choice is a mutual fund. Green Investments has chosen to distinguish the two market segments by household worth since this characteristic provides useful behavioral information regarding the different people.
Green Investments participates within the financial service industry. This multi-billion dollar ($14.8) industry services a wide range of people and companies with financial services such as investments. There are many different types of investments offered including but not limited to:
Within the industry, customers are served by a wide range of service providers including:
Buying decisions are often based on who you know or familiarity that the person may have with a specific company. Most of the service providers can provide a similar menu of investment options.
Fee structures vary from firm to firm. Many are percentage based on the amount of money the client investments. Some firms charge hourly rates while other firms charge a quarterly management fee. The fee structures are set in stone for some service providers while others take a more flexible approach and are willing to work with the customer to set up special arrangements.
Green Investments has no direct competitors that offer environmentally sound stock investment services. All of the current environmental investment options are mutual fund based. Examples of this type of mutual funds include Janus, Citizen Funds, Sierra Club Environmental Fund, and Portfolio 21.
Other competitors that Green Investments faces are the typical range of financial advisors. These indirect competitors provide customers with a wide range of different investment options. They could always place an investment order for a specific company, but these specific competitors do not do any independent research on the environmentalism of different companies.
Green Investments will leverage its sustainable competitive edge of independent environmental research based on a custom set of criteria based markers for an objective measure of a company’s dedication to environmentalism. The competitive edge will be marketed by using the mantra of “think globally, act locally.” This marketing slogan will encourage people to do their part in regards to helping the environment through responsible investing. The sales campaign will rely on metrics that indicate environmental investments can and do outperform the S&P 500 Index.
Green Investments’ competitive edge is the environmental marker criteria that when applied indicates which economic performing companies with solid environmental commitments. The markers are effective for extremely valuable for several reasons:
The key here is the fact that an objective, easy to apply, and accurate measurement system has been developed to provide environmental analysis for any company that has the markers applied to them. No one else offers this type of service as an information source for the decision making process of stock investments.
“Think globally, act locally.” This well known and concise mantra simply suggests everyone should do their part. Green Investments services allows people to make investments based on their conscience. So many people want to do good but are unsure how to. Green Investments’ services allows people to do the right thing, with no real cost relative to the other options. Green Investments’ returns are better than the S&P 500 Index.
The marketing effort will concentrate on Green Investments’ ability to empower people to make a substantial difference in this world while getting a great return on their money. Green Investments will use magazine advertisements and community based marketing (networking, sponsorship and participation in seminars) to increase visibility for Green Investments and the services offered. The advertisements will be a steady way that people will become aware of the investment options as well as some visibility for the company itself. The community involvement implicitly accepts the premise that good business relies on networking (inter relationships, both business and personal) to be a significant source of business and good will. Green Investments will participate in numerous on-topic events and seminars that will display them as experts as well as give them a podium to describe the different services.
The sales strategy will rely on using quantitative evidence the recommended companies outperform the S&P 500 Index. In 1999-2001, Green Investments’ chosen companies outperformed the index by 2.4%. This is a significant amount. The sales strategy will concentrate on that by making smart green investments, you can achieve better then average returns on your money. A sales packet will be assembled and distributed to prospective customers that shows the better than average historic returns that Green Investments recommended companies enjoy.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
<$1 million worth customers | $54,746 | $156,665 | $178,225 |
>$1 million worth customers | $22,889 | $73,633 | $83,766 |
Total Sales | $77,635 | $230,298 | $261,991 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
<$1 million worth customers | $8,212 | $23,500 | $26,734 |
>$1 million worth customers | $3,433 | $11,045 | $12,565 |
Subtotal Direct Cost of Sales | $11,645 | $34,545 | $39,299 |
Green Investments has identified several milestones which will act as ambitious yet achievable goals for the organization. By establishing the goals, the need to reach them will develop an implicit incentive for all organizational members to work hard to achieve the milestones.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business plan completion | 1/1/2003 | 2/1/2003 | $0 | Sarah & Steve | Planning |
First $ million account | 1/1/2003 | 4/15/2004 | $0 | Sarah | Sales |
Profitability | 1/1/2003 | 6/1/2005 | $0 | Steve | Accounting |
Revenue of $250K | 1/1/2003 | 9/15/2004 | $0 | Sarah | Sales |
Totals | $0 |
Green Investments will be lead by the founding team of Sarah Lewis and Steve Burke. Sarah has an undergraduate and Masters in environmental studies from the University of Burlington. After Sarah obtained the degrees she moved to Washington DC where she worked for the Environmental Protection Agency (EPA) for four years, performing environmental impact statements for a variety of industries, companies, and projects. Sarah was also a project manager for Janus in their evaluation department where they performed company wide environmental assessments of companies that were perspective investments for the fund.
The other member of Green Investments management team is Steve Burke. Steve hails from a financial background. Steve has an undergraduate degree in Finance from Seattle University and a MBA from the University of Washington. After school Steve went to work for Salomon Smith Barney in their investment department for eight years.
The positions will be phased in on an as needed basis. Please review the following chart for personnel forecasts.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Sarah | $30,000 | $40,000 | $40,000 |
Steve | $30,000 | $40,000 | $40,000 |
Account Manager | $27,000 | $36,000 | $36,000 |
Administrative Assistant | $15,000 | $15,000 | $15,000 |
Bookkeeper | $10,000 | $12,000 | $12,000 |
Research Assistant | $8,250 | $9,000 | $9,000 |
Total People | 6 | 6 | 6 |
Total Payroll | $120,250 | $152,000 | $152,000 |
The following sections will outline important financial information.
The following table details important Financial Assumptions.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 |
The Break-even Analysis is shown in the following table and chart.
Break-even Analysis | |
Monthly Revenue Break-even | $15,225 |
Assumptions: | |
Average Percent Variable Cost | 15% |
Estimated Monthly Fixed Cost | $12,941 |
The following table will indicate Projected Profit and Loss.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $77,635 | $230,298 | $261,991 |
Direct Cost of Sales | $11,645 | $34,545 | $39,299 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $11,645 | $34,545 | $39,299 |
Gross Margin | $65,990 | $195,753 | $222,692 |
Gross Margin % | 85.00% | 85.00% | 85.00% |
Expenses | |||
Payroll | $120,250 | $152,000 | $152,000 |
Sales and Marketing and Other Expenses | $0 | $0 | $0 |
Depreciation | $3,804 | $317 | $317 |
Rent | $7,800 | $7,800 | $7,800 |
Utilities | $1,800 | $1,800 | $1,800 |
Insurance | $1,800 | $1,800 | $1,800 |
Payroll Taxes | $18,038 | $22,800 | $22,800 |
Other | $1,800 | $1,800 | $1,800 |
Total Operating Expenses | $155,292 | $188,317 | $188,317 |
Profit Before Interest and Taxes | ($89,301) | $7,436 | $34,375 |
EBITDA | ($85,497) | $7,753 | $34,692 |
Interest Expense | $73 | $220 | $120 |
Taxes Incurred | $0 | $2,165 | $10,277 |
Net Profit | ($89,374) | $5,051 | $23,979 |
Net Profit/Sales | -115.12% | 2.19% | 9.15% |
The following table and chart will indicate Projected Cash Flow.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $77,635 | $230,298 | $261,991 |
Subtotal Cash from Operations | $77,635 | $230,298 | $261,991 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $3,000 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $80,635 | $230,298 | $261,991 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $120,250 | $152,000 | $152,000 |
Bill Payments | $38,394 | $71,497 | $84,646 |
Subtotal Spent on Operations | $158,644 | $223,497 | $236,646 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $300 | $1,000 | $1,000 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $158,944 | $224,497 | $237,646 |
Net Cash Flow | ($78,308) | $5,801 | $24,345 |
Cash Balance | $692 | $6,492 | $30,837 |
The following table will indicate the Projected Balance Sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $692 | $6,492 | $30,837 |
Other Current Assets | $7,000 | $7,000 | $7,000 |
Total Current Assets | $7,692 | $13,492 | $37,837 |
Long-term Assets | |||
Long-term Assets | $19,000 | $19,000 | $19,000 |
Accumulated Depreciation | $3,804 | $4,121 | $4,438 |
Total Long-term Assets | $15,196 | $14,879 | $14,562 |
Total Assets | $22,888 | $28,371 | $52,399 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $4,561 | $5,994 | $7,043 |
Current Borrowing | $2,700 | $1,700 | $700 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $7,261 | $7,694 | $7,743 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $7,261 | $7,694 | $7,743 |
Paid-in Capital | $125,000 | $125,000 | $125,000 |
Retained Earnings | ($20,000) | ($109,374) | ($104,323) |
Earnings | ($89,374) | $5,051 | $23,979 |
Total Capital | $15,626 | $20,677 | $44,656 |
Total Liabilities and Capital | $22,888 | $28,371 | $52,399 |
Net Worth | $15,626 | $20,677 | $44,656 |
The following table indicates Business Ratios found within the industry of financial services as well as ratios specific to Green Investments. Please note that while there are some similarities between the general financial service industry and Green Investments, GI is more unusual in that they do their own assessment of companies, beyond typical research.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 196.64% | 13.76% | 8.79% |
Percent of Total Assets | ||||
Other Current Assets | 30.58% | 24.67% | 13.36% | 44.18% |
Total Current Assets | 33.61% | 47.56% | 72.21% | 76.27% |
Long-term Assets | 66.39% | 52.44% | 27.79% | 23.73% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 31.73% | 27.12% | 14.78% | 38.61% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 13.60% |
Total Liabilities | 31.73% | 27.12% | 14.78% | 52.21% |
Net Worth | 68.27% | 72.88% | 85.22% | 47.79% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 85.00% | 85.00% | 85.00% | 100.00% |
Selling, General & Administrative Expenses | 200.12% | 82.81% | 75.85% | 82.68% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.66% |
Profit Before Interest and Taxes | -115.03% | 3.23% | 13.12% | 1.37% |
Main Ratios | ||||
Current | 1.06 | 1.75 | 4.89 | 1.59 |
Quick | 1.06 | 1.75 | 4.89 | 1.22 |
Total Debt to Total Assets | 31.73% | 27.12% | 14.78% | 3.09% |
Pre-tax Return on Net Worth | -571.95% | 34.90% | 76.71% | 60.22% |
Pre-tax Return on Assets | -390.49% | 25.43% | 65.37% | 7.76% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | -115.12% | 2.19% | 9.15% | n.a |
Return on Equity | -571.95% | 24.43% | 53.70% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 9.42 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 26 | 28 | n.a |
Total Asset Turnover | 3.39 | 8.12 | 5.00 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.46 | 0.37 | 0.17 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $430 | $5,798 | $30,094 | n.a |
Interest Coverage | -1,231.74 | 33.80 | 286.46 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.29 | 0.12 | 0.20 | n.a |
Current Debt/Total Assets | 32% | 27% | 15% | n.a |
Acid Test | 1.06 | 1.75 | 4.89 | n.a |
Sales/Net Worth | 4.97 | 11.14 | 5.87 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
<$1 million worth customers | 0% | $0 | $0 | $0 | $2,500 | $3,545 | $4,545 | $5,878 | $6,335 | $7,474 | $7,558 | $8,255 | $8,656 |
>$1 million worth customers | 0% | $0 | $0 | $0 | $0 | $0 | $2,136 | $2,763 | $2,977 | $3,513 | $3,552 | $3,880 | $4,068 |
Total Sales | $0 | $0 | $0 | $2,500 | $3,545 | $6,681 | $8,641 | $9,312 | $10,987 | $11,110 | $12,135 | $12,724 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
<$1 million worth customers | $0 | $0 | $0 | $375 | $532 | $682 | $882 | $950 | $1,121 | $1,134 | $1,238 | $1,298 | |
>$1 million worth customers | $0 | $0 | $0 | $0 | $0 | $320 | $414 | $447 | $527 | $533 | $582 | $610 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $375 | $532 | $1,002 | $1,296 | $1,397 | $1,648 | $1,667 | $1,820 | $1,909 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sarah | 0% | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Steve | 0% | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Account Manager | 0% | $0 | $0 | $1,500 | $2,000 | $2,500 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
Administrative Assistant | 0% | $0 | $0 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 |
Bookkeeper | 0% | $0 | $0 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 |
Research Assistant | 0% | $0 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 |
Total People | 2 | 3 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | |
Total Payroll | $5,000 | $5,750 | $9,750 | $10,250 | $10,750 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $0 | $0 | $0 | $2,500 | $3,545 | $6,681 | $8,641 | $9,312 | $10,987 | $11,110 | $12,135 | $12,724 | |
Direct Cost of Sales | $0 | $0 | $0 | $375 | $532 | $1,002 | $1,296 | $1,397 | $1,648 | $1,667 | $1,820 | $1,909 | |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $375 | $532 | $1,002 | $1,296 | $1,397 | $1,648 | $1,667 | $1,820 | $1,909 | |
Gross Margin | $0 | $0 | $0 | $2,125 | $3,013 | $5,679 | $7,345 | $7,916 | $9,339 | $9,444 | $10,315 | $10,816 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | 85.00% | |
Expenses | |||||||||||||
Payroll | $5,000 | $5,750 | $9,750 | $10,250 | $10,750 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $317 | $317 | $317 | $317 | $317 | $317 | $317 | $317 | $317 | $317 | $317 | $317 | |
Rent | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | |
Utilities | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Insurance | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Payroll Taxes | 15% | $750 | $863 | $1,463 | $1,538 | $1,613 | $1,688 | $1,688 | $1,688 | $1,688 | $1,688 | $1,688 | $1,688 |
Other | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | $150 | |
Total Operating Expenses | $7,167 | $8,030 | $12,630 | $13,205 | $13,780 | $14,355 | $14,355 | $14,355 | $14,355 | $14,355 | $14,355 | $14,355 | |
Profit Before Interest and Taxes | ($7,167) | ($8,030) | ($12,630) | ($11,080) | ($10,766) | ($8,676) | ($7,010) | ($6,439) | ($5,016) | ($4,911) | ($4,040) | ($3,539) | |
EBITDA | ($6,850) | ($7,713) | ($12,313) | ($10,763) | ($10,449) | ($8,359) | ($6,693) | ($6,122) | ($4,699) | ($4,594) | ($3,723) | ($3,222) | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $25 | $25 | $23 | |
Taxes Incurred | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Profit | ($7,167) | ($8,030) | ($12,630) | ($11,080) | ($10,766) | ($8,676) | ($7,010) | ($6,439) | ($5,016) | ($4,936) | ($4,065) | ($3,561) | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | -443.18% | -303.70% | -129.85% | -81.13% | -69.14% | -45.65% | -44.43% | -33.50% | -27.99% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $2,500 | $3,545 | $6,681 | $8,641 | $9,312 | $10,987 | $11,110 | $12,135 | $12,724 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $2,500 | $3,545 | $6,681 | $8,641 | $9,312 | $10,987 | $11,110 | $12,135 | $12,724 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $3,000 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $0 | $0 | $0 | $2,500 | $3,545 | $6,681 | $8,641 | $9,312 | $10,987 | $14,110 | $12,135 | $12,724 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $5,000 | $5,750 | $9,750 | $10,250 | $10,750 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | |
Bill Payments | $62 | $1,854 | $1,983 | $2,578 | $3,020 | $3,262 | $3,799 | $4,087 | $4,193 | $4,437 | $4,484 | $4,636 | |
Subtotal Spent on Operations | $5,062 | $7,604 | $11,733 | $12,828 | $13,770 | $14,512 | $15,049 | $15,337 | $15,443 | $15,687 | $15,734 | $15,886 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $300 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $5,062 | $7,604 | $11,733 | $12,828 | $13,770 | $14,512 | $15,049 | $15,337 | $15,443 | $15,687 | $15,734 | $16,186 | |
Net Cash Flow | ($5,062) | ($7,604) | ($11,733) | ($10,328) | ($10,225) | ($7,831) | ($6,409) | ($6,025) | ($4,456) | ($1,577) | ($3,599) | ($3,461) | |
Cash Balance | $73,938 | $66,335 | $54,602 | $44,275 | $34,049 | $26,218 | $19,809 | $13,785 | $9,329 | $7,752 | $4,153 | $692 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $79,000 | $73,938 | $66,335 | $54,602 | $44,275 | $34,049 | $26,218 | $19,809 | $13,785 | $9,329 | $7,752 | $4,153 | $692 |
Other Current Assets | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
Total Current Assets | $86,000 | $80,938 | $73,335 | $61,602 | $51,275 | $41,049 | $33,218 | $26,809 | $20,785 | $16,329 | $14,752 | $11,153 | $7,692 |
Long-term Assets | |||||||||||||
Long-term Assets | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 | $19,000 |
Accumulated Depreciation | $0 | $317 | $634 | $951 | $1,268 | $1,585 | $1,902 | $2,219 | $2,536 | $2,853 | $3,170 | $3,487 | $3,804 |
Total Long-term Assets | $19,000 | $18,683 | $18,366 | $18,049 | $17,732 | $17,415 | $17,098 | $16,781 | $16,464 | $16,147 | $15,830 | $15,513 | $15,196 |
Total Assets | $105,000 | $99,621 | $91,701 | $79,651 | $69,007 | $58,464 | $50,316 | $43,590 | $37,249 | $32,476 | $30,582 | $26,666 | $22,888 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $1,788 | $1,897 | $2,477 | $2,912 | $3,136 | $3,663 | $3,947 | $4,045 | $4,288 | $4,330 | $4,478 | $4,561 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $3,000 | $3,000 | $2,700 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $1,788 | $1,897 | $2,477 | $2,912 | $3,136 | $3,663 | $3,947 | $4,045 | $4,288 | $7,330 | $7,478 | $7,261 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $0 | $1,788 | $1,897 | $2,477 | $2,912 | $3,136 | $3,663 | $3,947 | $4,045 | $4,288 | $7,330 | $7,478 | $7,261 |
Paid-in Capital | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 | $125,000 |
Retained Earnings | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) | ($20,000) |
Earnings | $0 | ($7,167) | ($15,197) | ($27,826) | ($38,906) | ($49,672) | ($58,347) | ($65,357) | ($71,796) | ($76,812) | ($81,748) | ($85,813) | ($89,374) |
Total Capital | $105,000 | $97,833 | $89,804 | $77,174 | $66,095 | $55,328 | $46,653 | $39,643 | $33,204 | $28,188 | $23,252 | $19,187 | $15,626 |
Total Liabilities and Capital | $105,000 | $99,621 | $91,701 | $79,651 | $69,007 | $58,464 | $50,316 | $43,590 | $37,249 | $32,476 | $30,582 | $26,666 | $22,888 |
Net Worth | $105,000 | $97,833 | $89,804 | $77,174 | $66,095 | $55,328 | $46,653 | $39,643 | $33,204 | $28,188 | $23,252 | $19,187 | $15,626 |
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If you are using your business plan to attract investment or get a loan, you may also include a business financial history as part of the financial section. This is a summary of your business from ...
Need help creating a financial plan for your startup? Here's a step-by-step financial planning guide with an example to create a financial plan in no time.
Find out what a financial summary is and learn how to write a financial summary by following this step-by-step guide for success when creating a business plan.
Download free financial statements and other financial templates for your business plan in PDF, Google Sheets, and Excel formats.
A financial summary is the lifeline of a business plan. It is what gives the company a sense of vitality and pragmatism. The financial part frequently appears near the end of the plan, but this does not lessen the significance of what it contains. In actuality, it is the part of the business plan that gets the greatest scrutiny.
Creating a financial forecast and budget prepares you with the necessary financial statements and forecasts to set goals and pursue business loans and investments.
Learn how to write the financial plan section of your business plan: income statement, cash flow projections, and balance sheet (with examples).
When writing a business plan, it's important to put together a comprehensive financial plan detailing your expenses, revenue and cash flow. Learn more here.
Creating an executive summary for your business plan that is comprehensive and concise will help outline your company's objectives. Get started here.
For the financial section of business plan, you need to include your business expenses, projections, funding requests, and more.
Business plan financials is the section of your business plan that outlines your past, current and projected financial state. This section includes all the numbers and hard data you'll need to plan for your business's future, and to make your case to potential investors. You will need to include supporting financial documents and any ...
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing. A business plan should follow a standard format and contain all ...
The Financial section of your business plan will begin with an introduction to the Financial Plan. The actual structure and details provided in the introduction is left up to the entrepreneur. Moreover, some entrepreneurs (business plan writers) feel its imperative to give the reader a quick summary of each forecasted statement, while others ...
The last article in a comprehensive series to help you craft the perfect business plan for your startup.
Learn more about how to write a business plan financial section with this guide, including information on the different documents to include in this section.
What are business plan financial projections? Business plan financial projections are a company's estimates, or forecasts, of its financial performance at some point in the future. For existing businesses, draw on historical data to detail how your company expects metrics like revenue, expenses, profit, and cash flow to change over time.
A good business plan guides you through each stage of starting and managing your business. You'll use your business plan as a roadmap for how to structure, run, and grow your new business. It's a way to think through the key elements of your business. Business plans can help you get funding or bring on new business partners.
Template 2: Business personnel and financial plan one-page summary. This PPT Slide is your go-to tool for streamlined data management! This one-pager is a game-changer, allowing you to organize upcoming agendas, sales market analysis, event budgets, and financial statements.
For a business plan, it summarizes the key points including the business overview, market analysis, strategy plan timeline and financial projections. Typically, the executive summary is the first section of a business plan, but it should be written last to ensure it accurately reflects the content of the entire document.
Explore a real-world financial services business plan example and download a free template with this information to start writing your own business plan.