Here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement. Based in the Washington, D. A business plan is all conceptual until you start filling in the numbers and terms. The sections about your marketing plan and strategy are interesting to read, but they don't mean a thing if you can't justify your business with good figures on the bottom line.
When writing a business plan, properly prepared pro forma financial statements must be included. This financial information provides potential investors a hypothetical snapshot of the future financial health of your business.
Investors will not look at a business plan that does not include pro forma financial statements. Follow these steps to create a pro forma financial statement for your business plan. Items you will need Business plan software Certified public accountant Make educated assumptions of future cash flows, fixed and current assets, and liabilities.
This can be done by researching standards for the industry in which your business will operate. Prepare a Pro Forma Balance Sheet. Include all current and fixed assets, liabilities and shareholders' equity.
To compute shareholders' equity, subtract total liabilities from total assets. Get the Pro Forma Income Statement in order. Include all sales revenues, cost of goods sold, losses, operating expenses, taxes and depreciation of property, plant and equipment, if applicable.
Organize the Statement of Cash Flows. In this document, include net income, any sales or purchases of assets non-current and any stock issues, repayments of bonds or dividend payouts, if applicable.
Create a Pro Forma Financial Statement for monthly periods for the first year; quarterly for the second year; and annually for years three through five.
Tips If numbers are not your strong suit, consider hiring a certified public accountant to generate these forms for you. Be conservative and realistic with your financial assumptions. Prepare three different financial scenarios. Best case optimisticthe expected financial outcomes and worst case pessimistic.
Warning Don't forget to include notes about your financial statements. Investors will want to know the reasoning behind how you arrived at the numbers. Resources Read more about pro forma financial statements.
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To write a pro forma income statement, first list all of your anticipated sources of income. A guide to writing the financial section of a business plan developed by SCORE of northeastern Massachusetts.
Editorial Disclosure: Inc. writes about products and services in this and other articles. How to Write the Financial Section of a Business Plan: The Components of a Financial Section This is your pro forma profit and loss statement, detailing forecasts for your business for the.
Pro Forma financial statements are forward looking financial projections. Small business owners create Pro Formas to forecast their future revenues and profits while entrepreneurs use them to estimate the profitability of a new business venture.
To create a pro forma income statement, work from your current Income statement and try to predict the future changes. Sit down with an income statement from the current year.
Consider how each item on that statement can or will be changed during the coming year. Financial Plan The following financial projections are based on conservative sales forecasts by month for the next twelve months, and by year for the four years thereafter.
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