To them, the heart of your business plan is represented by the financial projections which must include income statements, balance sheets, and cash flow statements. These statements must convince your backers of two very important details: Profit, or net income, represents the difference between revenues and expenses for the specified period.
A projected income statement shows profits and losses for a specific future period — the next quarter or the next fiscal year, for instance. It uses the same format as a regular income statement, but guesstimating the future rather than crunching numbers from the past.
It's also known as a budgeted income statement. Penetrate the Mystery Your projected income statement is important for making business plans and for attracting investors.
It has to be as accurate as possible, even though it's about events that haven't happened yet. Strategies for making projections depend on the age of your business and your own experience: If you're making projections for an established business, past sales and expenses give you a guide to the future.
If your company is a startup but you have experience in the industry, use that experience to make your projections. If you don't have experience, hire an accountant who does, or extrapolate from the market research you did for your startup.
If your company is new, it's a good idea to make projections for the next three years. The first year's projections should include monthly budgeted income statements.
After that you can go quarterly. Sales and Expenses To begin making your projections, look at sales. How many customers do you expect over the projection period? How many units sold, or hours of service, if you're providing services?
What price are you charging? Project the cost of goods sold as well. Next, extrapolate your expenses. These include fixed costs such as leasing a vehicle and variable costs such as marketing expenses. You don't have to break everything down item by item; a single item for "office supplies" is probably enough, without detailing price per ream of printer paper.
Drawing up the Statement Say you're making a projection for the next quarter. Start with the business's projected sales income. Subtract the cost of goods sold to get the gross margin.
Subtract other operating expenses to get net operating income, then subtract any interest payments due to get your net income. Using Your Knowledge Use the projected income statement to decide whether your plans need changing.
Is your projected sales income too low? Then find a way to amp up the income, for example, by moving more units or increasing unit prices. If the projections show your business running in the red at first, that's not surprising: Lots of businesses start out operating at a loss. However, the losses shouldn't be so deep they'll shut you down.
It's a good idea to draw up a projected balance sheet so you can see how much debt you'll be carrying.Each free business plan template is available in Microsoft Word (DOC) format, and many of the Business Plan Forms are available in Excel (XLS) format as well.
Just choose a . The Income Statement is one of the three financial statements that you need to include in the Financial Plan section of the business plan. The Income Statement shows your revenues, expenses, and profit for a particular period.
The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business. and discipline into a business. 5. A good business plan is a living document.
It should be updated regularly. 2 Title Page Your Company Name Street Address City, State & Zip Code • Projected income statement (1 year forward) • Projected cash flow statement (12 months forward) Existing Business. Download a free 5-Year Financial Plan template, which helps when planning a launch of a new products with involvement of a long-term financing.
5-Year Financial Plan includes, Profit and Loss, Balance Sheet, Cash Flow and Loan Amortization. Jul 15, · Net Income – Your total income without income taxes. Cash Flow Projection: A Cash Flow Projection will demonstrate to a loan officer or investor that you are a good credit risk and can pay back a loan if it’s granted/5(31).