How to Complete the
Business Financial Plans Section...The Last Section of your
Business Action Plan.

You're at the last section of your Business Action Plan The Business Financial Plans. This section determines whether or not your small business financial plan and idea is viable. The key component in determining whether or not you're going to attract investors or obtain financing.

What Does it Include

This section consists of four parts. The Income Statement, Cash Flow Projection, the Balance Sheet, and a brief summary of these statements. You'll need to gather some financial information to prepare these statements.

Now let's look some examples for putting your financial statements together. Starting with the Income Statement.

Leave out the sections that doesn't apply and add sections that are necessary for your business.

The Income Statement

The Income Statement, or Profit or Loss Statement, states your income, expenses, and profit for a particular period of time. A snapshot of your business. Indicating whether or not your business is profitable at that time.

For a start up business, this should be completed monthly for at least the first year. A more established business, quarterly.

Your business name

Income Statement for the month ending _____________

Income

Sales:
Cost of Sales

Beginning inventory:
Plus purchases
Minus ending inventory
Cost of Sales:

Sales - Cost of sales = Gross profit from sales
Services
Affiliates
Network Marketing
AdSense
Interest Income

Total Income

Expenses:

Start Up Business Costs
Capital and Operational Costs
Marketing Costs
Support Fees

Total Expenses

Total Income - Total Expenses = Profit or Loss.

Profit - Income Taxes = Net Income

Cash Flow Projection

The Cash Flow Projection shows how cash is expected to flow in and out of your business. Letting you know when your expenditures are too high, to arrange short term loans or investors, and to deal with a cash flow surplus by making investments.

A Cash Flow Projection will give you a good idea of how much capital investment your business idea needs. Informs banks that your business is or isn't a good credit risk and if there will be enough cash on hand to pay a line of credit or loan.

Indicates the anticipated cash to be generated or expended over a chosen period of time in the future. You will want to show Cash Flow Projections for each month for one year period as part of the Financial Plan portion of your Business Action Plan.

How to Complete

Use your estimated sales figures for each month. You will only enter the sales that are collectible in cash during the specific month you are dealing with.

Cash expenditures for what you actually expect to pay. Reconciliation of Cash Revenues starts with an opening balance or carryover from last month's operations.

The current month's Revenues are added to this balance. The current month's Disbursements are subtracted, and the adjusted cash flow balance is carried over to the next month.

One word of caution...don't be too overly optimistic when completing this section.

Cash Flow Projection

Your Business Name:

Cash Flow Projection for the month of _________.

Cash Revenue:
Revenue from Product Sales
Revenue from Service Sales

Total Cash Revenue:

Cash Disbursements:
Cash Payments to Suppliers
Management Draws
Salaries and Wages
Advertising Expenses Paid
Professional Fees Paid
Rent/Mortgage Payments
Insurance Paid
Telecommunications Payments
Utilities Payments

Total Cash Disbursement:

Reconciliation:
Previous Month Balance:
Add: Total Cash Revenues
Deduct: Total Cash Disbursement

Closing Cash Balance

Balance Sheet

The balance sheet is very similar to your Personal Financial Statement. Provides a picture of your business' net worth on a particular date. Summarizes all the financial data about your business in categories. Assets minus Liabilities equal Equity.

BALANCE SHEET As of __________ (Date)

Assets

Current Assets:

Cash:

Cash in Bank Accounts
Petty Cash
Net Cash

Inventory
Accounts Receivable
Prepaid Expenses

Total Current Assets

Fixed Assets:

Real Estate:
Land
Buildings minus depreciation
Net Land and Buildings

Equipment:
Less Depreciation
Net Equipment

Total Assets

Liabilities

Current Liabilities

Accounts Payable
Salaries & Vacations Payable
Federal Income Tax Payable
Sales Tax Payable
401K Payable
Medical Payable
Returns & Allowances
Credit Cards

Total Current Liabilities

Long-Term Liabilities

Long-Term Loans
Mortgage
Total Long-Term Liabilities

Total Liabilities

Equity

Earnings
Owner's Equity - Capital
Owner - Draws
Retained Earnings
Current Earnings
Total Earnings

Total Equity

Summary

Now you're ready to write a brief summary of each of the three financial statements. Keep it short. No more than a paragraph for each statement. Cover the highlights.

Moms Work From Home Tips

After completing the Financial Plan section,you now have all the information you need to go back and complete the Executive Summary section of your Business Action Plan .

Having a clear understanding whether your business idea is viable and avoiding some mistakes, and planning for your business success before you even started...

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